January 17, 2009 / 11:17 AM / 10 years ago

WRAPUP 7-Moscow gas crisis talks go into night, no deal yet

* Medvedev says no solution yet to gas crisis

* Putin-Tymoshenko negotiations continue into night

* Russia questions if Ukrainian PM has negotiating mandate

* Gazprom says determined to reach agreement with Ukraine

By Oleg Shchedrov and Simon Shuster

MOSCOW, Jan 17 (Reuters) - Talks to end the Russia-Ukraine gas row dragged into the night on Saturday after a summit in Moscow failed to resolve the dispute that has crippled gas supplies to European countries in the grip of midwinter.

“Unfortunately, and I would like to underline this, all the efforts have so far yielded no results,” Russian President Dmitry Medvedev said as he opened a Kremlin meeting of nations affected by the dispute. He pledged that talks would continue.

Officials from Russia’s Gazprom (GAZP.MM) and Ukrainian state energy company Naftogaz joined Russian Prime Minister Vladimir Putin and his Ukrainian counterpart, Yulia Tymoshenko, in an attempt to end the long-running dispute over gas prices.

“Broader talks have started,” said Putin’s chief spokesman, Dmitry Peskov. “They will last as long as is needed.”

Russia cut off supplies to Ukraine on Jan. 1 because it would not pay higher prices. Six days later, export flows to eastern Europe through Ukraine ceased amid Russian accusations that Kiev was “stealing” gas intended for export.

The lack of gas has closed factories across eastern Europe. With Ukraine’s pipeline network bringing Europe about a fifth of its gas, the row has raised questions about Russia’s reliability as an energy supplier and Kiev’s fitness as an EU partner.

In Brussels, the Czech presidency of the European Union said it was not satisfied by the gas talks in Moscow and urged both sides to reach a deal.

“We expected both parties to announce that they had reached an agreement on the resumption of Russian gas supply to the EU via Ukraine. This was not the case,” Czech Industry and Trade Minister Martin Riman said in a statement.

After the Kremlin meeting, Medvedev reiterated Moscow’s position on the issue at the heart of the dispute, saying that Kiev had to pay European-level prices for gas supplies, more than double current levels.

“There is nothing damaging about that. It’s the money our other partners pay and Ukraine is in a position to pay it,” Medvedev told a news conference.

Kiev, whose crisis-gripped economy is forecast to contract by up to 5 percent this year, says it cannot afford such high prices and wants Russia to pay higher transit fees for gas it exports through Ukraine.


Talks scheduled earlier on Saturday between Putin and Tymoshenko did not take place.

A source close to the Russian side said it appeared Tymoshenko, a former gas trader, lacked the necessary mandate to discuss a solution and had come to Moscow “empty-handed”.

Tymoshenko clashed with her domestic political rival, President Viktor Yushchenko, on the eve of her trip to Moscow about tactics for solving the dispute.

In Kiev, a source in Yushchenko’s office said there were no divergences between the president and the prime minister. “The prime minister has a full mandate at the talks. Otherwise, she would not be taking part in them,” the source said.

Russia invited heads of government of all countries buying or transporting its gas to its “Moscow International Conference on Ensuring Delivery of Russian Gas Supplies” on Saturday, but most stayed away.

The Czech Republic urged EU member states not to attend so that Brussels could speak with one voice. Slovakia was the only EU member to come, apart from the Czechs. Most other attendees were Russia’s allies in the Balkans and eastern Europe.

Putin said on Friday, after talks in Germany, Moscow was nearing a deal to restart gas deliveries to European customers.

A key hurdle to ending the dispute appeared to have been overcome when a consortium of European gas companies said they had agreed to supply enough gas to fill the empty pipeline and restore pressure so that exports could resume.

But the key sticking point in the row — the price Ukraine must pay for its own supplies this year — remained unsolved.

Gazprom says Ukraine should pay European-level prices of $450 per 1,000 cubic metres (tcm) of gas for 2009, up from $179.5 per tcm in 2008. But Ukraine, heading into its worst recession for a decade, has said it can afford only $201.

The row has focused minds in Europe about the need to find new routes for gas but experts say any solution would take years to build and Gazprom says EU dependency on Russian gas is forecast to increase over the coming years.

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