UPDATE 2-Russia says open to talks if Ukraine pays off some gas debt

Wed May 14, 2014 12:48pm EDT

(Adds comments from European Energy Commissioner)

By Darya Korsunskaya

MOSCOW May 14 (Reuters) - Russia will restart gas talks with Ukraine if its new leaders pay off at least part of its gas debt, Prime Minister Dmitry Medvedev said on Wednesday, softening Moscow's stance in a dispute that has raised fears of a new "gas war".

Suggesting Russia would be open to a price revision, Medvedev struck the most conciliatory tone yet since Russian state-controlled Gazprom almost doubled prices after protesters toppled Ukraine's pro-Moscow President Viktor Yanukovich.

"Nobody ever said: hand over $4 billion straight away, rather (we said) show that you are ready to act ... If they pay part of it, that's the minimum requirement for resuming talks," Medvedev told reporters.

Asked whether Russia could consider revising the price, he said: "Of course it is possible. It's a question for negotiations."

Ukraine's state gas company Naftogaz declined to comment.

Ukraine, dependent for more than half of its gas needs on Russia, has balked at demands by Gazprom to pay $485 per 1,000 cubic metres, accusing Moscow of using energy supplies "politically" to punish the country for trying to break free from Kremlin influence and turn to the West.

Kiev says $268.5 per 1,000 cubic metres is a fair price.

In an interview with a German newspaper, European Energy Commissioner Guenther Oettinger said a price of $350-380 per 1,000 cubic metres, roughly equivalent to the current gas price in the EU, would be a fair price for Ukraine to pay for gas.

"The $485 demanded by Russia is unjustified," he was quoted as saying by the Frankfurter Allgemeine Zeitung.

SUPPLY THREAT

Gazprom has stood firm, saying it was sticking to a 2009 contract signed willingly by Kiev, and has threatened to cut supplies if Kiev fails to redeem its debt, which it says stands at $3.51 billion not including payments for June.

That could trigger a new "gas war" curbing supplies to Europe. Half of Europe's imports of Russian gas go through Ukraine.

To resolve the standoff, Russian Energy Minister Alexander Novak and Oettinger agreed by telephone to meet on May 19 in Berlin. There they plan to set a date and time for three-way talks with Ukraine, the energy ministry said in a statement. The EU confirmed the meeting.

Oettinger told the German paper he hoped to have clarity by the end of the month. He called on Ukraine to pay the outstanding debt, saying Russia must then deliver gas and without asking for advance payments.

The European Union has imposed sanctions on Russian officials and companies over Moscow's annexation of Crimea and is pressing its efforts to wean itself off Russian gas, but so far has failed to diversify its supplies.

In response to the sanctions, Russia is looking to send more fuel eastwards, trying to secure a long-awaited deal to supply China with gas. But both sides have yet to agree on price.

"The heads of CNPC and Gazprom reached an agreement to sign a contract during the visit of Russian President Vladimir Putin to China in May. However for the contract to be signed, a price for gas must be agreed," Interfax news agency quoted a CNPC official for foreign relations as saying in Beijing.

"Rumours that the Chinese side is trying to use the current events in Ukraine to reduce the price for Russian gas are not true." (Writing by Elizabeth Piper; Editing by Mark Heinrich)

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