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Ukraine-Russia gas-pricing dispute persists

Negotiations in Brussels set to resume after talks failure raises risk of gas-supply disruption to EU member states.

Last updated: 10 Jun 2014 09:05
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Ukraine refused to pay its natural-gas bills after Russia decided to nearly double rates [AFP]

Eight hours of talks between Russia, Ukraine and the EU have ended without a deal on resolving a natural gas-pricing dispute between Russia and Ukraine, raising the risk of supply disruption to the EU member states.

Monday's meeting in Brussels, Belgium, was the first challenge for Petro Poroshenko, the newly elected Ukrainian president, who has promised to hold dialogue with Russia to try to prevent Ukraine, a former Soviet state, from splitting.

Russia has threatened to cut off gas supplies to Ukraine early on Tuesday as the talks were cut-off, with possible knock-on effects for EU supplies, over Ukraine's failure to pay its gas bill.

Yuri Prodan, Ukraine's energy minister, said talks, which were brokered by the European Commission, the EU's executive body, had stumbled over a Russian price mechanism proposal which would link lower prices to export duty. 

"Unfortunately the Russian position regarding the price mechanism has changed," he said according to the Reuters news agency.

Alexander Novak, Russian energy minister, said he had proposed "a very constructive plan, which we believe all stake-holders could and should accept".

He said the plan covered how to make outstanding payments for November and December last year by June 10 and in addition for a certain amount of the debt for April and May to be paid.

Guenther Oettinger, the European commissioner for energy, took part in the talks, acting as a mediator in the process.

A European Commission spokeswoman and Prodan said the talks could resume either at 9pm on Tuesday or at 9am on Wednesday in Brussels, Reuters said.

The US expressed hope "significant progress" could be achieved after a flurry of diplomacy, including a meeting between Poroshenko and Russian President Vladimir Putin last week.

Poroshenko, the 48-year-old confectionery tycoon turned president, promised late on Sunday to end fighting "this week" in Ukraine's economically vital eastern region, that has claimed more than 200 lives.

And he affirmed after being sworn in as Ukraine's fifth president on Saturday that Kiev would sign a landmark pact with the EU that would finally push it out of Russia's orbit.

The EU-mediated gas talks in Brussels come on the eve of a Russian deadline for Ukraine to cover a debt of nearly $4.4bn or have its shipments end on Wednesday.

Ukraine disagrees with Russia's decision to almost double gas prices to $485 per 1,000 cubic metres starting from April 1, after the then Ukrainian president Viktor Yanukovich fled the country following a popular uprising

Gazprom has recently pushed back an ultimatum to Ukraine on imposing pre-payment for natural gas deliveries after the country paid $786m in arrears.

Russian natural gas that transits through Ukraine supplies about 15 percent of Europe's needs.

Oettinger, the EU energy official, has been urgently seeking a compromise to save 18 member states from seeing their deliveries start dwindling.

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