Russia and Ukraine hold gas row talks in Moscow

By Dmitry Zhdannikov and Guy Faulconbridge

MOSCOW/KIEV (Reuters) - The two top gas executives from Russian and Ukraine held talks in Moscow on Thursday, in the first face-to-face contact since their row choked off supplies to EU countries in bitter winter weather.

There was no immediate word on the outcome of the talks, but further urgent diplomacy was planned for later on Thursday when delegations from Kiev and Moscow were to meet officials from a European Union increasingly concerned at the gas cut-offs.

Russia's state-controlled gas export monopoly Gazprom fully suspended supplies of transit gas toward Ukraine on Wednesday, saying there was no longer any point delivering the gas because Kiev had shut down the pipelines.

Ukraine -- whose pro-Western leaders have clashed with the Kremlin over their drive to join NATO -- said Russia was deliberately starving Europe of gas. Russia cut off gas for Ukraine's domestic consumption on New Year's Day.

The row over gas prices and debts owed by Ukraine to Russia cut heating to tens of thousands of households in Bulgaria and hit supplies as far west as France and Germany as Europe faced freezing mid-winter temperatures.

In Bulgaria, one of the worst affected countries, at least 45,000 households were without central heating on Wednesday. Schools were shut and some companies were closed. Temperatures in Sofia fell to minus 14 degrees Celsius overnight.

Gazprom Chief Executive Alexei Miller and Oleh Dubyna, head of Ukrainian state energy firm Naftogaz, met overnight in Moscow, a Gazprom official told Reuters. The official declined to give any details.

The two men "discussed ways out of this crisis situation," Russian news agencies quoted Gazprom spokesman Sergei Kupriyanov as saying.

Miller and Dubyna were expected to meet again in Brussels when they hold talks with European Energy Commission Andris Piebalgs and Czech Trade and Industry Minister Martin Riman, representing the Czech EU presidency.

Against a backdrop of mounting pressure from European countries on both Kiev and Moscow to get gas flowing again, Russian President Dmitry Medvedev spoke by telephone late on Wednesday with Ukrainian President Viktor Yushchenko.

Medvedev told his Ukrainian counterpart gas supplies had become hostage to squabbling in the Kiev leadership and that Moscow would only resume pumping gas for Ukraine's own use if Kiev agreed to pay a market price for the fuel.

ENERGY DEPENDENCE

Gazprom said it was increasing supplies to the European Union and Turkey via other routes. Despite those measures, the dispute cut Russia's supplies to Europe -- which depends on Moscow for a quarter of its gas supplies -- by half.

The reduction in supplies has been sharper and more prolonged than a similar disruption in January 2006.

The euro zone's major economies have escaped significant economic repercussions, but France has reported a drop in supplies and an Italian industry ministry spokesman said Italy has begun tapping its stockpiles of natural gas.