EU top negotiator in gas price row talks to Kiev, Moscow next

Wed Jun 25, 2014 11:29am EDT

Related Topics

* Ukraine needs to fill gas storage "as full as feasible"

* Amount of gas reverse flow dictates how long Ukraine can hold out

* Ukraine says EU monitors can check it is respecting transit

By Barbara Lewis

BRUSSELS, June 25 (Reuters) - The European Union's top negotiator in the gas price row between Ukraine and Russia said on Wednesday he would call Moscow as soon as possible to try to get both sides back to talks and Ukraine meanwhile should fill up its gas storage.

The row over how much Ukraine should be paying Russia for its gas is unresolved after more than a month of talks brokered by EU Energy Commissioner Guenther Oettinger.

Three-way negotiations broke down at the start of last week and Gazprom turned off gas supplies to Ukraine.

Both Kiev and Moscow are now suing each other at the international arbitration court in Stockholm for the billions they say they owe each other, a process that could take years.

In what he said was "a first step" to getting Moscow and Kiev back to talks to work out an interim solution, Oettinger met Energy Minister Yuri Prodan and Andriy Kobolev, chief executive of Ukraine's Naftogaz, in Brussels on Wednesday.

He told reporters he would call the Russian Energy Minister Alexander Novak and Gazprom CEO Alexei Miller as soon as possible to try to move negotiations forward.

Meanwhile, he emphasised the need "to fill Ukraine's storage as full as feasible" ahead of the coming winter.

Apart from depending on Russia for more than half of its gas needs, Ukraine is the transit route for roughly half of the gas Russia supplies to the European Union, which counts on Gazprom for about 30 percent of its consumption.

In previous gas crisis in 2006 and 2009, involving Ukraine and Russia, Gazprom said there was knock-on disruption of EU because Kiev siphoned off gas meant for the EU.

Prodan told Oettinger on Wednesday he was willing to admit EU monitors to check Ukraine respected its transit commitments.

Since the previous gas outages, all sides have been working on their options. Russia built the Nord Stream pipeline to Germany, bypassing Ukraine, and Gazprom has pushed ahead with its giant South Stream project, which would make Ukraine all but irrelevant as a transit nation.

The European Commission says South Stream is so far in breach of EU law and has suspended negotiations on bringing it into line, while trying to improve energy security for both Ukraine and the EU with better infrastructure and larger amounts of storage.

No problems have been reported so far for Ukraine or the European Union as gas stocks are high following a mild winter.

Asked about how long Ukraine can survive without Russian gas, Prodan said it depended on volumes of reverse flow gas.

Reverse flow pipelines allow Russian gas to be shipped back to Ukraine, although they are not enough to meet Ukraine's demand of more than 50 bcm per year. Oettinger said any reverse flow gas would be sold at the market price.

Slovakia, whose strategic position on the border with Ukraine makes it best placed to ship gas back, says reverse gas flows from Slovakia, Hungary and Poland to Ukraine could reach around 16-17 billion cubic metres (bcm) per year.

(additional reporting by Henning Gloystein in London and Vladimir Soldatkin in Moscow, editing by William Hardy)

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