June 13, 2014 / 9:58 AM / 4 years ago

Ukraine suggests compromise gas price in row with Russia

KIEV (Reuters) - Ukraine said on Friday it was ready to pay a compromise price for Russian natural gas for 18 months to avert the threat of Moscow cutting off supplies and allow time to reach a long-term pricing agreement.

A gas pipe is pictured at an underground gas storage facility in the village of Mryn, 120 km (75 miles) north of Kiev May 21, 2013. REUTERS/Gleb Garanich

Andriy Kobolev, chief executive of state gas company Naftogaz, said the price of $326 per 1,000 cubic metres - higher than what Kiev wants to pay and lower than what Russia demands - was proposed by the European Commission during talks.

In talks that are made even more difficult by the conflict in Ukraine, in which Kiev accuses Moscow of backing a separatist rebellion in eastern regions, Russia has threatened to cut off supplies to Ukraine if it fails to start paying off billions of dollars in debts by Monday.

The Russian Energy Ministry has ruled out holding any more talks with Kiev and the EU before the Monday deadline.

“In our opinion the European Commission has proposed a compromise that is not bad,” Kobolev told reporters, suggesting that Kiev should pay this price for an 18-month interim period.

“Ukraine will be ready under such a compromise to pay its unpaid bills from the past,” he said.

But adding that he had received offers from European companies to deliver gas at a lower price, he said: “Even so, we believe it is still rather high.”

He gave no details of the offers he said he had on his desk.

Russia almost doubled the price to $485 per 1,000 cubic metres after Ukraine’s Moscow-leaning president was toppled in February. Ukraine wants Moscow to stick to the price of $268.5 offered after Yanukovich spurned a trade pact with the EU.

Moscow has also offered to cut the price to $385 by eliminating an export duty of $100 per 1,000 cubic metres. This would be around the average price for Russian gas in Europe.

Russia says Ukraine has piled up more than $4 billion in debts to state exporter Gazprom, which also delivers gas to the EU, half of it through pipelines via Ukraine.

Gazprom says Ukraine should pay $1.95 billion of those debts by Monday or face a cut in supplies.

Asked if Kiev would pay by then, Kobolev said: “I am not ready to answer that because there are still five more hours until the end of the day. Anything can happen.”

Reporting by Pavel Polityuk and Natalia Zinets, Editing by Timothy Heritage

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