By Christian Lowe and Dmitry Zhdannikov
MOSCOW/KIEV (Reuters) - A deal to restore Russian gas supplies via Ukraine to Europe appeared on the verge of collapse on Sunday after Moscow rejected handwritten additions by Kiev as a 'mockery of common sense'.
Russian President Dmitry Medvedev appealed to EU leaders to exert influence on Kiev to withdraw the annotations. Government sources said Prime Minister Vladimir Putin had proposed sending officials to Brussels on Monday for emergency talks.
Ukraine, its own supplies cut off in a dispute with Moscow over the price it pays for Russian gas, signed an agreement on Sunday allowing monitors to check gas flows across its territory to Europe and assuage Russian fears Kiev would siphon off gas for itself. Russia had signed the deal a day earlier.
The European Union was also party to the deal and EU monitors had already begun arriving when the new dispute flared.
"I cannot call such stipulations and additions other than a mockery of common sense and violation of earlier achieved agreements," Medvedev said of the Ukrainian terms.
"These actions, in fact, aim to disrupt the existing agreements on monitoring gas transit and are clearly provocative and destructive in essence ... I therefore order the government not to implement the document signed yesterday."
BROADER TENSIONS
The commercial dispute over gas prices has played out against a background of broader tensions between Ukraine, seeking to join the NATO alliance, and its giant northern neighbour.
Russia cut off all gas via Ukraine to Europe last week. The EU, which gets a fifth of all its gas supplies via that route, has found itself playing arbiter in what has become in many respects a bitter power-play between two ex-Soviet states still acting out a separation.
Putin has accused the pro-Western Ukrainian leadership of President Viktor Yushchenko, facing a billowing economic crisis, of being corrupt and inept.
A scanned copy of the monitoring agreement, seen by Reuters, has the handwritten words "with declaration attached" next to the signature of the Ukrainian government's representative.
The declaration, a copy of which has also been seen by Reuters, stated that Ukraine had not siphoned off any transit gas and that it had no outstanding debts to Russian export monopoly Gazprom -- a central bone of contention between the two countries.
It said Russia must supply volumes of "technical" gas, at no cost, to Ukraine to maintain pressure in the pipeline system -- a demand the Russian side rejected. Gazprom said Ukraine was demanding 21 million cubic metres of technical gas per day -- enough to meet the daily needs of a country like Austria.
"Ukraine has again taken a destructive position," a Gazprom statement said.
The EU had no immediate comment on the development, but the Commission had said earlier that the attached Ukrainian declaration did not affect the substance of the agreement.
Russia, which wants Ukraine to pay market prices after years of getting its gas at subsidised levels, clearly disagreed.
"I want you to inform our European partners that they have occurred in a very complicated situation and we would ask them to talk to Ukraine's leadership so that the latter should revoke this document," President Medvedev told Foreign Minister Sergei Lavrov at a televised meeting.
"Once these stipulations have been removed, we will be ready to proceed with transiting gas."
Valentin Zemlyansky, spokesman for Ukrainian state energy company Naftogaz, said: "Ukraine continues to guarantee its openness and is ready to ensure 100 percent transits of Russian gas across its territory."
MARKET PRICE
Russian-Ukrainian disputes, and there are a number, carry domestic implications for Ukraine.
Ukraine was an industrial and agricultural power base of the old Soviet Union, producing everything from missiles to wheat. Eastern Ukraine is largely Russian-speaking and the Crimea, also populated by Russian speakers, is home to a Russian naval base that Kiev wants removed as quickly as possible.
Eastern and central Europe have borne the brunt of the gas supply disruptions, with Bulgaria shutting schools because it could not heat them and Slovakia saying it would re-start a nuclear reactor which it shut down last year.
In the Bulgarian capital Sofia, residents expressed anger.
"Half of Europe has become a hostage of the squabbling between Russia and Ukraine. This is pure blackmail, totally unacceptable and we should demand financial compensations," said Krasimira Dimitrova, 56.
Energy companies in the Balkans, where overnight temperatures reached as low as -17 degrees Celsius (1.4 Fahrenheit), have switched to alternative fuels and other suppliers to restore heating to hundreds of thousands of homes.
Russia says it has been subsidising fuel supplies to Ukraine for years and now wants it to pay $450 per 1,000 cubic metres of gas. That is roughly in line with the price EU customers pay but a huge increase on the $179.5 Kiev paid last year.
