Ukraine-Russia gas supply negotiations hit a crucial point

PUBLISHED : Monday, 02 June, 2014, 8:46pm
UPDATED : Monday, 02 June, 2014, 8:46pm

Ukraine and Russia were due to enter key talks yesterday to settle a long-running dispute over the price of gas deliveries, ahead of tomorrow's first meeting between Kiev's new pro-Western leader and US President Barack Obama.

Ukraine's third "gas war" with Russia in less than a decade erupted when Moscow, stunned by the sudden removal of an ally who had just rejected a European Union alliance that the Kremlin greatly feared, nearly doubled the price it charges its neighbour for the fuel.

Kiev accused Moscow of "economic aggression" and refused to meet Russia's demand for US$5.17 billion.

Russian gas through Ukraine pipelines supplies about 15 per cent of European needs and a top EU envoy is seeking a compromise that could save 18 member states from seeing their deliveries dwindle.

Ukraine's Naftogaz bowed to EU and Kremlin pressure, making a US$786 million payment to its Russian counterpart Gazprom to keep the talks alive.

Gazprom now says it is willing to discuss a lower price and analysts believe that a compromise is in sight because Russia would prefer to avoid complicating its relations with Europe still further.

Ukrainian Prime Minister Arseniy Yatsenyuk added to the general cheer surrounding the meeting by promising to settle Russia's entire bill using a part of a new Western financial rescue package. "We will pay our bills," Yatsenyuk told German public television in an interview aired on Sunday.

Agence France-Presse