EU to hold another round of Ukraine, Russia gas talks

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The European Commission has said it will hold further talks with Ukraine and Russia on resolving their gas supply dispute after outlining a possible price regime to secure supplies to June 2015.

EU Energy Commissioner Guenther Oettinger yesterday said talks in Brussels produced a "possible payment plan (for unpaid bills) and also suggested ways prompt payment in future could be assured."

The heads of Ukraine gas company Naftogaz and Russia's giant Gazprom met separately to discuss possible terms which could cover payments "up to at least June next year," Oettinger told a press conference.

The two had in turn asked for "a number of days" to discuss the details with their respective governments and officials after which they would return for another trilateral meeting "this week or next," he said.

During this period, all parties agreed that there would be no interruption of gas supplies and no requirement for pre-payment for deliveries, he added.

Oettinger did not say what price level was being discussed except that it would be below the $485 last charged by Gazprom and above the $268 Kiev believes is the fair market level.

On Friday in Berlin, the Commissioner reached a deal after talks with Russian Energy Minister Alexander Novak and his Ukrainian counterpart Yuriy Prodan for a Kiev payment of $786 million to cover outstanding bills for February and March.

On the back of that payment, Russia earlier yesterday postponed from today to next week its demand that all gas shipments be paid for up-front, failing which it would cut off deliveries.

"We welcome Ukraine starting to pay back its debt and postpone the pre-payment regime until June 9," Gazprom chief executive Alexei Miller said in a statement before the talks in Brussels.

Kiev had threatened to take Russia to international arbitration if the gas had been cut off and yesterday Oettinger said the talks agreed that this option would also not be taken up until both companies reported back.

Russian gas transiting through Ukraine covers about 15 percent of European needs, meaning any cut to supplies, as happened in 2006 and 2009, has a knock-on effect on the EU, several of whose member states are totally reliant on Russia for their energy.

The talks in Brussels took place just as there was an upsurge in violence in eastern Ukraine where hundreds of pro-Russian gunmen struck a border guard camp in one of the biggest attacks of an insurgency which Washington says is directed by Moscow.

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