Good Chance of MoscowKiev Gas Deal EU Energy Chief

'Good Chance' of Moscow-Kiev Gas Deal: EU Energy Chief

European Energy Commissioner Guenther Oettinger says Russia and Ukraine have a good chance of striking a deal to resolve a standoff over Russian gas deliveries to Ukraine by June 1.

BERLIN -- Russia and Ukraine have a "good chance" of striking a deal to resolve a standoff over Russian gas deliveries to Ukraine by June 1, European Energy Commissioner Guenther Oettinger said Monday.

"We made relatively good progress and have a good chance of reaching an agreement by June 1," said Oettinger after a Berlin meeting with Russian Energy Minister Alexander Novak and his Ukrainian counterpart, Yuri Prodan.

Under a proposed deal, subject to approval in Kiev and Moscow, Ukraine would pay $2.5 billion to Russian energy giant Gazprom (IW 1000/16) in coming days and weeks -- about half the amount Russia says it is owned in back payments and for the month of June.

Oettinger said the goal was to ensure "security of supply" and "to avoid disruptions," adding that aid from the EU and International Monetary Fund would help Ukraine pay its debt, provided both Moscow and Kiev agree to the deal.

"We make it possible, but the decision will be made in Kiev," said the German EU commissioner.

Europe is locked in a confrontation with Russia over Ukraine, where Brussels believes the Kremlin has supported pro-Moscow separatists and worked to destabilize the Western-leading transitional government by threatening to cut off gas supplies.

Amid the standoff, Gazprom has hiked gas prices and toughened conditions for former Soviet satellite Ukraine.

Gazprom had warned Kiev it would suspend its gas deliveries on June 3 if Ukraine does not by then settle its bill for June, worth $1.66 billion. Moscow has also said Ukraine had amassed a gas debt of $3.5 billion.

Upfront Payment, Then Renegotiation

Oettinger said that under the deal being considered, Ukraine would initially pay $2 billion to Gazprom by Thursday, if the government in Kiev agrees, and Russia would then be ready to renegotiate the price of future deliveries.

A $500 million payment from Ukrainian gas company Naftogaz to Gazprom would follow on June 7 under the proposed plan.

Prodan told media after the Berlin meeting that "Ukraine is prepared to pay the debt fully" but stressed that the EU plan outlined Monday had to first be approved by his government.

The threats from Russia have raised deep concerns in the European Union, which imports a quarter of its gas from Russia, nearly half of which flows via Ukraine.

Europe saw disruptions in supplies in 2006 and 2009 when Ukraine dipped into deliveries during previous price disputes with Moscow.

German Chancellor Angela Merkel warned earlier Monday that "it is important that the energy talks make progress ... I hope an agreement can be reached this week. That is very important."

Russia had hiked its gas price for Ukraine for April and May to $485 per 1,000 cubic meters, one of the highest among European countries. On average, EU countries pay between $350 and $400 per 1,000 cubic meters.

Novak said Ukraine's debt had reached "astronomical" levels but added that "our side is prepared, when we receive payment, to continue negotiations on the price for future supplies."

Copyright Agence France-Presse, 2014

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