* Russia has set Tuesday deadline for payment
* Gazprom says Kiev owes more than $4 billion
* Ukraine, Russian presidents met last week
(Updates with start of talks, Oettinger comment, adds PIX)
By Barbara Lewis and Martin Santa
BRUSSELS, June 9 Officials from Ukraine and
Russia met late on Monday in last-minute talks brokered by the
European Union to resolve a dispute that could halt the flow of
gas from Russia.
After popular protests toppled a pro-Moscow Ukrainian
president in February, Russia raised the price it charges
Ukraine for gas and has threatened to cut off supplies on
Tuesday if Kiev does not pay its overdue bills. Moscow has also
annexed Crimea from Ukraine, while armed pro-Russian separatists
have tried to split off some eastern parts of the country.
Monday's 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 Russian gas producer
Gazprom and Ukraine's Naftogaz would attend talks in
Brussels, brokered by EU Energy Commissioner Guenther Oettinger.
The negotiations, which began shortly after 7 p.m. (1700
GMT) on a public holiday in much of Europe, follow four previous
rounds of trilateral talks as well as bilateral conversations
between the two CEOs.
Arriving for the meeting, Oettinger told reporters the CEOs
had contacted him at the weekend and asked for trilateral talks
to resume as soon as possible.
Separately on Monday, Ukraine said it had reached a "mutual
understanding" with Moscow on parts of a plan proposed by
Poroshenko for ending the conflict with the rebels in the east.
UKRAINE, EU BOTH AT RISK
The European Union gets roughly a third of its gas imports
from Russia, and almost half of that is sent via Ukraine, so if
Gazprom cuts off gas to Ukraine, the EU could also face supply
All sides are anxious for a compromise, analysts say, 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," said Jonathan Stern, chairman of the Natural
Gas Research Programme at the Oxford Institute for Energy
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 the debt is rising 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 has 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 Will Waterman)