Russia and Ukraine meet amid hopes of gas deal
MOSCOW/KIEV (Reuters) - Russian and Ukrainian leaders were to meet on Saturday to try to end the dispute affecting gas supplies to Europe, with Prime Minister Vladimir Putin saying a solution could be close.
The row has angered the European Union, which gets about a fifth of its gas from pipelines that cross Ukraine, and left many countries in eastern and southern Europe with no supplies in the depths of winter.
Ukrainian Prime Minister Yulia Tymoshenko left Kiev on Saturday for talks with Putin in Moscow, the Ukrainian government said on its Web site. Diplomats believed Tymoshenko was unlikely to travel without the prospect of some agreement.
Putin said on Friday after talks in Germany that Moscow was nearing a deal to restart gas deliveries to European customers.
"We are approaching interesting agreements which could lead to a solution," Putin said after meeting German Chancellor Angela Merkel in Berlin on Friday.
The dispute, one of the worst disruptions in the history of Russian gas supplies to Europe, has raised further doubts over Russia's reputation as a reliable energy supplier and added to political divisions in Ukraine.
Tymoshenko is locked in a dispute with domestic political rival President Viktor Yushchenko, a factor complicating efforts to end the dispute.
Russia has invited leaders of all the nations consuming its gas to a summit at the Kremlin on Saturday afternoon but it is unclear who will attend, apart from Ukraine and the EU.
Brussels will send European Energy Commissioner Andris Piebalgs and Czech Industry and Trade Minister Martin Riman, representing the European Union's presidency, but has discouraged individual member states from attending because it wants to negotiate with Moscow as a bloc.
The row takes place against a backdrop of strained political ties between Moscow and Kiev. Russia has been angered by Yushchenko's aspiration to join NATO and by Kiev's support for Tbilisi during the Russian-Georgian war in August.
Russia cut gas supplies to Ukraine on January 1 after talks on unpaid debts and 2009 gas prices broke down late on New Year's Eve. As the row deepened amid Moscow's claims that Ukraine was stealing Russian supplies destined for Europe, transit gas exports were cut on January 7.
SUPPLY CONTRACT
The gas row with Russia has sharpened a dispute between Tymoshenko and Yushchenko ahead of the first Ukrainian presidential election since the 2004 Orange Revolution. The election is expected in 12 months.
Yushchenko said the issue of renewing Russian gas supplies to Europe was linked to finalising a 2009 supply contract for Ukraine, while Tymoshenko has disputed this.
First Deputy Prime Minister Oleksander Turchynov said at a televised discussion aired in the early hours of Saturday: "The meeting (of Tymoshenko and Putin) will take place tomorrow and I hope the prime minister of Ukraine will resolve these problems."
Russia's state-controlled gas behemoth, Gazprom, has said 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 the worst recession for a decade, has said it can only afford $201 per tcm. Ukraine also wants an increase in the fees it gets from Russia for the transit of gas to Europe if the price of gas is raised.
Tymoshenko set conditions for the weekend talks, refusing to accept intermediaries in gas deals and ruling out any sell-off of Ukraine's pipelines. Putin and Tymoshenko in October agreed to do away with intermediaries in the gas trade.
Tymoshenko, a former gas trader, also demanded that Ukraine speak with one voice in the negotiations.
"Simply speaking -- I need two things: Don't throw a spoke in the wheel and don't stab any backs," she said.
In Germany, Putin welcomed a deal with a consortium of European energy companies to provide so-called "technical gas," which is needed to pressurise the empty pipeline network and allow supplies to be pumped from Russia to Europe via Ukraine.
"We approached our main Western partners -- E.ON Ruhrgas, Gaz de France, ENI and our Austrian partner -- with a request to share the risk of supplying technical gas to Ukraine," Putin said.
Gazprom said it would sell the technical gas to the European consortium at the prevailing market price of about $450 per 1,000 cubic metres. The consortium would seek reimbursement from Ukraine later.
Putin told reporters on Saturday Russia was suffering political damage from the gas row. "There is damage, but what can we do?" he asked, insisting Russia had done everything it could to avert the crisis.
The row has focussed minds in Europe about the need to find new routes for gas.
Slovakia, one of the European countries most affected by the gas cutoff, said it would cancel curbs on domestic gas usage after arranging deliveries through a pipeline bypassing Ukraine.
Merkel called for quick progress on the construction of a new Russian-sponsored pipeline known as Nord Stream, which will bring gas from Russia to Germany, also bypassing Ukraine.
(Writing by Giles Elgood and Guy Faulconbridge; Editing by Janet Lawrence)