* Deadline for Ukraine gas payment expired at midnight
* EU officials say gas storage around half-full
* Ukraine major gas transit nation for EU supplies
By Barbara Lewis
BRUSSELS, April 8 Ukraine's energy minister, EU
officials and industry representatives held talks on Tuesday on
cutting reliance on Russian gas as tension with Moscow drove
home the urgency of finding alternative energy sources and
Concerns reached a new pitch after pro-Moscow protesters
seized buildings in eastern Ukraine's mainly Russian-speaking
industrial heartland, which Kiev said is a replay of events in
Crimea, the peninsula Moscow annexed last month.
At the same time, Kiev missed a midnight deadline to reduce
its $2.2 billion debt owed to Russia for natural gas supplies.
That adds to concerns Russia could cut off Ukraine's gas
supplies, with possible knock-on effects for the European Union.
The European Commission, the EU executive, said Energy
Commissioner Guenther Oettinger was chairing two meetings in
One was of the EU "gas coordination group", at which experts
debate storage levels, and one brought together industry and
Ukraine's energy minister to discuss security of supply.
A copy of an invitation to industry, seen by Reuters, says
Oettinger invites "relevant gas companies for a frank and open
discussion" to contribute to EU energy security for the next
winter and over the mid-term.
In particular, it cites the importance of including
liquefied natural gas operators. Super-cooled LNG, which can be
brought by ship from sources around the world, is one way to cut
reliance on pipeline gas from Russia.
Ukraine's Energy Minister Yuri Prodan was quoted by Interfax
news agency as saying Russia's decision to nearly double gas
prices to Ukraine was unjustified and Kiev could not pay.
"If the situation is not resolved, there will be a threat
not only for the supply of gas to Ukraine, but also for the
transit of gas to Europe," Prodan said.
Following previous crises in 2006 and 2009 over Kiev's
unpaid gas bills, which led to the disruption of exports to
western Europe, the European Union has already introduced some
measures to improve its energy security, including increased gas
storage and more renewable energy.
Although analysts say nowhere near enough has been done, EU
officials say there is renewed determination to act, alongside a
recognition that changing Europe's energy system will take time.
Denmark put forward the idea, adopted by an EU summit last
month, that the Commission should draw up by June a detailed
plan on increasing energy security and says this time around the
mood is completely different.
"There is no doubt that this is a game-changer," Danish
Foreign Minister Martin Lidegaard told Reuters by telephone late
last week, ahead of the Brussels talks. "The whole Ukraine
crisis has definitely changed the atmosphere during our
Russia provides Ukraine with around half of its gas and the
European Union with roughly one third of its demand, some 40
percent of which currently flows via Ukraine.
Europe hopes to secure extra imports of LNG and is working
on increasing capacity to reverse the flow through some
pipelines so that gas, including some imported from Russia, can
be sent back eastward to Ukraine from EU countries.
Oettinger has been trying for months to broker a deal with
Slovakia to allow Ukraine to receive up to 8 billion cubic
metres a year in a reverse flow of gas.
Ukraine, however, says progress on this has not been fast
enough while Russia says it would be illegal.
Europe's increased storage levels, currently around half
full, mean it can cope with a short-term disruption.
The EU's gas coordination group, with energy experts from
all 28 EU member states, was set up in response to the previous
pricing rows between Russia and Ukraine.
It last met in March, when officials from some EU countries,
such as Poland and Greece, said they feared gas shortages and
economic damage if Russia stopped pumping gas to Ukraine.
Moscow also has a great deal at stake. Its gas exports to
the European Union provide state-controlled exporter Gazprom
with an average of $5 billion per month in revenues.
(Additional reporting by Henning Gloystein in London and Robin
Emmott and Adrian Croft in Brussels and Pavel Polityuk in Kiev;
Editing by Anthony Barker)