* Russia had set Tuesday deadline for payment
* Gazprom says Kiev owes more than $5 billion
* Ukraine, Russian presidents met last week
By Barbara Lewis and Martin Santa
BRUSSELS, June 9 Ukraine and Russia will try to
avert a gas war in last minute talks on Monday, brokered by the
European Union in the hope of preventing supply disruptions and
taking the heat out of the conflict in eastern Ukraine.
Russia has threatened to cut off gas supplies to Ukraine on
Tuesday if it does not pay bills that rose sharply after popular
protests toppled a pro-Moscow Ukrainian president in February.
Moscow has since annexed Crimea from Ukraine and pro-Russian
rebels are fighting security forces in the east.
The talks follow a tentative rapprochement last week when
newly-installed Ukrainian President Petro Poroshenko and
Russia's Vladimir Putin met in France at commemorations of the
World War Two D-Day landings.
The Commission, the EU executive, announced at the weekend
that Russian Energy Minister Alexander Novak, Ukrainian Energy
Minister Yuri Prodan and the CEOs of Russia's Gazprom
and Ukraine's Naftogaz would attend talks in Brussels, brokered
by Energy Commissioner Guenther Oettinger.
Scheduled to start at 7 p.m. (1700 GMT) on a public holiday
in much of Europe, the negotiations follow four previous rounds
of trilateral talks as well as bilateral conversations between
the two CEOs.
Oettinger said a week ago there had been progress and his
"request and expectation" was that a deal could be agreed to
ensure uninterrupted gas supplies until June next year, which
would take Europe beyond the critical peak winter demand period.
The European Union gets roughly a third of its gas imports
from Russia, and almost half of that is sent via Ukraine,
meaning that if Gazprom cuts off gas to Ukraine, the EU could
also suffer from disrupted supplies.
DESIRE FOR COMPROMISE
Poroshenko's swearing in as president this weekend has
raised hope the wider conflict may ease, although fighting is
still intense in the separatist east of the country.
Analysts say both sides are anxious for a compromise, even
if Monday's talks stop short of solving all the issues.
"It is clear that the Russians really want a resolution
without a crisis," Jonathan Stern, chairman of the Natural Gas
Research Programme at the Oxford Institute for Energy Studies,
If EU officials could persuade Kiev to use some of the
billions of international aid money provided by the EU, the IMF
and the United States to at least partly reduce its debt to
Moscow, Stern predicted talks could continue and the immediate
threat of a cut-off would pass.
Russia gave Ukraine an extra week to clear its debts after
it paid a first instalment of $786 million a week ago.
Kiev says it cannot afford the amount now demanded by Russia
and wants to pay the lower price that it negotiated in the past.
Details of the price negotiations are a closely guarded
commercial secret. Oettinger has said only that the price being
considered was less than the $485 per 1,000 cubic metres Russia
has demanded and more than the $268.50 Kiev is seeking.
While the dispute has gone on, Gazprom has continued billing
Kiev at the higher rate. It says Ukraine owes it $4.46 billion
in unpaid bills and is running up more debt at a rate of more
than $1 billion per month.
Attempts to settle the gas row are complicated by Russia's
determination to press ahead with its giant South Stream
pipeline, which would deliver gas straight to the European
Union, bypassing Ukraine.
The European Commission says South Stream breaks EU law on
competition and asked Bulgaria to halt work on its section of
the project, prompting Russia on Monday to accuse the EU of
imposing "economic sanctions by stealth".
(Editing by Philippa Fletcher)