Ukraine Gas Talks Resume in Brussels to Avoid Cut-off This Week

Russia, Ukraine and the European Union will hold talks in Brussels today to end a dispute over natural gas payments.

The talks are scheduled for 7 p.m. Brussels time, said Olga Golant, a spokeswoman at the Russian Energy Ministry. Russia and Ukraine are close to a compromise, she said without giving details of a possible settlement.

Russian state gas exporter OAO Gazprom has given Ukraine until tomorrow to pay part of the country’s outstanding bill or face the prospect of a supply cut-off. Ukraine’s dependence on Russian energy has made gas part of the wider conflict between the two countries this year.

Gazprom and Ukrainian counterpart NAK Naftogaz Ukrainy, will hold bilateral talks before the three-way meeting, Ukrainian Energy Minister Yuri Prodan said today by phone. He said there’s no accord on gas prices and debt payments yet.

The European Union, which relies on Russian gas piped through Ukraine for about 15 percent of its supplies, is trying to broker a deal to avoid disruption.

After paying $786 million last week for February and March supplies, Ukraine should start paying $1.5 billion of debts for the last two months of 2013 and gas received in April and May, Gazprom said before today’s talks. Its spokesman Sergei Kupriyanov declined to comment today.

President Putin

“Gazprom and Ukrainian partners are close to a final agreement,” Russian President Vladimir Putin said at a news conference in France last week. Russia may reach a broader deal on gas supplies with Ukraine if debts are settled, he said after his first short meeting with Ukraine’s new leader Petro Poroshenko June 6.

Naftogaz may repay about $1 billion today, Russian newspaper Vedomosti reported, citing two unidentified persons. The companies last week discussed a new price at $360 per thousand cubic meters instead of current $485, Kommersant newspaper reported.

“That price hadn’t been discussed,” Prodan said today. “There is our proposal which is $268.50. There are no price proposals from Gazprom.”

In April, Gazprom raised Ukraine’s gas price 81 percent to $485 per thousand cubic meters, higher than for any EU member, citing a contract signed in 2009 as justification. Ukraine has refused to pay, including its debt from last year, seeking a return of its first-quarter price of $268.50.

Before it's here, it's on the Bloomberg Terminal.