Ukraine and Russia eye gas deal as talks on conflict stall

Kiev and Moscow have disagreed over whether a breakthrough has been made in efforts to avert a possible energy crisis this winter, while talks with the EU on easing the conflict in eastern Ukraine have apparently made no headway.

Russia has halted gas supplies to Ukraine because of unpaid bills, and warned that it would reduce the amount of gas moving through Ukrainian pipelines to EU states if Kiev siphoned off fuel for its own use in the cold months ahead.

"We didn't achieve any practical results on the gas question. But we hope that before an October 21st meeting ... between delegations from Ukraine, Russia and the European Commission, we will manage to find a solution," Ukrainian president Petro Poroshenko said after meeting his Kremlin counterpart, Vladimir Putin.

Shortly afterwards, however, the Russian leader delivered a more upbeat assessment of yesterday’s talks on the sidelines of an Asia-Europe summit in Milan. He said that “we have agreed with Ukrainian partners on conditions to restart gas supply to Ukraine, at least for the winter period”.

Mr Putin said Ukraine owed Russia $4.5 billion (€3.5 billion) for gas, and that cash-strapped Kiev’s EU allies should help fund repayment.

Advance payment

Previously, Moscow was demanding $5.3 billion (€4.15 billion) in arrears. Mr Putin also said that Moscow would now only supply gas to Ukraine after receiving advance payment.

“We consider that our European partners, the European Commission, also can and must lend Ukraine a hand to resolve this problem,” he said, after talks with German, French, British and Italian leaders.

Russian energy minister Alexander Novak said Ukraine had made a preliminary agreement to pay $385 (€302) per cubic metre of gas for the winter period, on terms of prepayment for future delivery and repayment of debts. He said details of how Ukraine would find funding for this were not yet clear.

With a note of caution, Mr Novak added: “We will say exactly what the Ukrainians have agreed to when a paper is signed. Now it’s possible to say that they are ready [to agree].”

Mr Poroshenko is treading a fine line in the gas talks, at which he seeks to secure reliable and affordable energy for the winter without appearing weak in dealings with Russia ahead of Ukraine’s parliamentary elections next Sunday.

Accusations

Kiev accuses Moscow of funding, arming and training separatist rebels fighting in eastern Ukraine, and of reinforcing them with Russian army units. Moscow denies the claim, but has strongly opposed Ukraine's pivot to the west since an uprising ousted the Kremlin-backed leader, Viktor Yanukovich, last winter. Ukraine, Russia and the rebels agreed a ceasefire deal last month.

Fighting continues in the Donetsk and Luhansk regions, however, and parts of the plan – including the need to pull back Ukrainian and rebel artillery, and for Ukraine to be able to retake control of its border to stop the flow of arms and fighters from Russia – are unfulfilled. No breakthrough on how to strengthen the ceasefire occurred at yesterday’s talks.