Apr 09 - Russia's President has told state-controlled natural gas producer Gazprom to hold off on making Ukraine pay up front for gas from Russia. But as Ciara Sutton reports the prospect of a gas war with Ukraine hasn't gone away entirely.
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No energy war just yet.
Russian President Vladimir Putin has told state-controlled Gazprom to hold off making Ukraine pay up front for gas from Russia.
Ukraine, which gets half its supplies from its neighbour now owes Moscow $2.2 billion.
It also failed to meet a deadline this week to pay its March bill.
Russia raised prices in recent weeks by a crippling 80 per cent.
But rather than cut off supply, Putin says Gazprom should talk to the EU first.
(SOUNDBITE) (Russian) RUSSIAN PRESIDENT VLADIMIR PUTIN, SAYING:
"Taking into account the complex situation in Ukraine and the fact that we have not yet finished talks with the EU, I would ask Gazprom and the government to hold off on such a possibility that comes from contract terms until these additional consultations take place."
The threat of disruption to gas flow through the region could hurt the EU too.
It gets about a third of its gas supplies from Russia - half of which, through Ukraine.
Alessandro Tentori is Global Head of Rates Strategy at Citi.
SOUNDBITE (English) Alessandro Tentori is Global Head of Rates Strategy at Citi, saying:
''The deal between Ukraine and Russia now is about reminding Europe that they can't deal without Russian oil imports and gas imports. So Russia being the biggest exporter of gas to the euro zone, to Europe, being akin to Saudi Arabia, one of the biggest oil exporters worldwide. So it's about reminding them that if Moscow really wants it can put pressure on the euro zone. It's a bargaining game.''
Relations between Kiev and Moscow remain in crisis following the ousting of Ukraine's Moscow-backed president in February.
Ukraine has vowed to stand by unpopular austerity measures - including raising the price of gas to consumers - to guard its independence.
And to meet the terms of a fourteen billion dollar loan from the IMF.
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