June 18 (Bloomberg) -- The Russian and Ukrainian presidents discussed a possible cease-fire for southeastern Ukraine hours after a pipeline fire blamed by the government in Kiev on sabotage threatened natural gas flows to Europe.
Presidents Vladimir Putin of Russia and Petro Poroshenko of Ukraine talked last night about bilateral relations between the countries and about the death of Russian journalists working in Ukraine, according to a Kremlin statement.
“The issue of a possible cease-fire in the area of a military operation in Ukraine’s southeast has been touched upon,” the Kremlin said after the leaders’ phone call.
Putin and Poroshenko spoke a day after Russia cut gas supplies to the Ukraine over unpaid bills and demanded advance payments from its former Soviet Union ally. The gas dispute has stoked tensions between the two governments as Ukraine battles pro-Russian insurgents in its eastern region.
Russia’s ruble weakened for a sixth day against the dollar today, dropping 0.1 percent, while the Micex stock index gained 0.1 percent, its first advance in three days, data compiled by Bloomberg show. The yield on Ukrainian dollar debt due 2023 rose four basis points to 9.29 percent, the most in almost a month.
Russian Prime Minister Dmitry Medvedev condemned Ukraine yesterday over the death of reporter Igor Kornelyuk, killed by mortar fire in the violence-torn Luhansk region in the nation’s east. Sound producer Anton Voloshin, also from the Russian State Television and Radio Broadcasting Company, was found dead later, the Interfax news service said, citing separatist forces.
“Those who call themselves the authorities in neighboring Ukraine answer for the situation there and it’s in their power to halt the bloodshed,” Medvedev said on his Facebook account.
Poroshenko ordered a probe into the deaths, as did the Organization for Security and Cooperation in Europe, which has tried to broker a peace plan.
While the fact last night’s call happened at all is positive, it doesn’t mark a major breakthrough, according to Tim Ash, chief emerging- market economist at Standard Bank Group Ltd.
“The two sides weren’t exactly playing up the outcome of the phone call so expectations should be downplayed,” he said today by e-mail from London.
The deaths stoke tensions three days after an attack by protesters on the Russian embassy in Kiev following the shooting down of a Ukrainian military plane by the rebels that killed all 49 people on board. Yesterday, Ukraine’s Interior Ministry blamed “terrorism” as the likely cause of the fire at the Urengoy-Pomary-Uzhgorod link in the central part of the country. It was the second pipeline fire in six weeks.
“Local residents reported hearing two strong claps that may indicate deliberate explosions,” Interior Minister Arsen Avakov said in the statement, blaming Russia for trying to discredit Ukraine as a reliable “partner in the gas sphere.”
The blaze was detected at about 2:20 p.m. local time, with flames shooting as high as 100 meters (330 feet), and emergency workers extinguished the blaze about two hours later, according to state pipeline operator UkrTransGas. Flows to Europe weren’t affected. About 20 kilometers of the pipeline were sealed off, with shipments redirected to a parallel section.
Ukrainian officials said they will boost security along the entire network to guard against any future attacks. The Urengoy-Pomary-Uzhgorod system has a capacity to carry about 28 billion cubic meters of gas a year, while Ukraine can send as much as 142 billion cubic meters of Russian gas annually to central and western Europe.
“It is a very alarming situation and a very strange coincidence,” Naftogaz CEO Andriy Kobolyev said on his Facebook page. “We will do everything possible” to boost security across the system, he said.
The Interior Ministry foiled two attempted attacks on pipelines before Ukraine’s May 25 presidential election, according to Avakov. Those attacks were designed to “discredit” Ukraine as a reliable transit corridor and “promote” Gazprom’s South Stream project to export gas through the Black Sea to Bulgaria and beyond, circumventing Ukraine, Avakov said.
Poroshenko discussed his proposal for a cease-fire with German Chancellor Angela Merkel yesterday, his office said in a statement. The proposal envisions the creation of a 10-kilometer buffer zone on the Ukrainian border with Russia, the withdrawal of insurgent groups, the return to Ukraine’s government of seized buildings and the decentralization of power.
Russia has as many as 38,000 soldiers on Ukraine’s borders and continues to supply arms and personnel to rebel forces in the eastern part of the country, Ukraine’s National Security Council chief, Andriy Parubiy, said June 16.
There are about 16,000 troops on Ukraine’s eastern frontier and another 22,000 in Crimea, the Black Sea peninsula that Russia annexed from Ukraine in March, Parubiy said.
The number of militants in Luhansk and the neighboring Donetsk region is about 15,000 to 20,000, half of whom are from Russia, including special forces, Parubiy said.
Igor Konashenkov, a spokesman for the Defense Ministry in Moscow, declined to comment on Parubiy’s assertions.
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