August 29, 2014 / 11:15 AM / in 3 years

UPDATE 2-Russia ready for gas talks with Ukraine, warns of disruptions

* Russia offers $100 discount to $385 from $485

* Ukraine wants $268.50 as offered to previous government

* EU says gas must not be used as a diplomatic weapon

* EU energy chief expects trilateral talks by mid-Sept (Adds detail, EU Commission statement)

By Katya Golubkova and Denis Pinchuk

MOSCOW, Aug 29 (Reuters) - Russia is ready for talks on resuming gas supplies to Ukraine, Energy Minister Alexander Novak said on Friday, warning of disruption to flows to Europe this winter if a row over pricing and debts was not resolved.

Novak said Moscow was ready to reduce its prices in an effort to secure a deal, but the proposed sum remained well above what Kiev has said it is willing to pay.

The dispute comes amid escalating tensions between the two countries, with Ukraine accusing Russia of sending weapons and men to help a separatist rebellion in the east of the country -- an accusation Moscow rejects.

Russian President Vladimir Putin agreed last year to cut the gas price for Ukraine to $268.50 per 1,000 cubic metres after then-Ukrainian President Viktor Yanukovich said he would snub the European Union in favour of closer ties with Russia.

But Yanukovich was toppled by mass protests in February, and Moscow hiked the price to $485. This was rejected by Kiev and Russia cut off the gas flow in June after the two sides failed to resolve their commercial dispute.

Novak said after meeting European Energy Commissioner Guenther Oettinger that Russia was ready to apply a retroactive discount, bringing the price per 1,000 cubic metres for April-June to $385. Ukraine has said it wants to return to the old price, while signalling it might agree to pay just above $300.

Oettinger’s spokeswoman said a repayment plan should be developed over the next weeks for all the gas that has not been paid for as part of an interim solution.

Gazprom has signalled that it may resume gas supplies once Ukraine pays off 2013 gas debts that it put at $1.45 billion. In total, the Russian gas exporter says Ukraine owes it more than $5 billion in unpaid bills.

Regardless of the fallout over the conflict in eastern Ukraine, Novak said Moscow was prepared for new gas talks.

“We will agree the date for a trilateral meeting at the beginning of next week,” he said. Oettinger told Reuters he expected discussions to resume by mid-September.


Despite the cut-off to Ukraine, Russian gas has been flowing normally across the country to Europe, which receives about half its imports of Russian gas via this route.

However, Novak said Kiev might start siphoning off some of this gas in the coming winter if it fails to build its reserves. He said Ukraine had stockpiled up to 16 billion cubic metres, but needed to pump as much as 10 billion more into storage.

There was no immediate comment from Kiev.

Various meetings, including talks between Putin and Ukrainian President Petro Poroshenko earlier this week, have so far failed to bear any tangible fruits over the gas issue, and time is running short before winter sets in.

Russian gas supplies to Europe were interrupted at the height of winters in 2006 and 2009 with southern Europe, which almost totally depends on Russian gas, hit the hardest.

Gazprom accounts for around a third of Europe’s gas needs. In 2013, half of the gas consumed in Ukraine came from Russia.

Oettinger said gas must not be used as a weapon in the Ukraine-Russia crisis, adding that all sides needed to work out an interim solution, given that international arbitration would not be able to resolve the dispute before the middle of 2015.

Gazprom has said Ukraine owes it more than $5 billion in unpaid bills.

“We always said through the crisis that we don’t see the gas sector as a tool for sanctions, measures and escalations. That is also true today,” Oettinger said. (Additional reporting by Vladimir Soldatkin in Moscow; Barbara Lewis and Robert Jan Bartune in Brussels; Editing by Polina Devitt and Crispian Balmer)

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