Russian, Ukraine PMs to meet for gas row talks

The Russian and Ukrainian prime ministers will meet on Saturday to try to resolve the ongoing gas row that has cut back supplies…

The Russian and Ukrainian prime ministers will meet on Saturday to try to resolve the ongoing gas row that has cut back supplies to a freezing Europe.

German chancellor Angela Merkel reiterated European calls for a quick end to the two countries' arguments over gas debts and prices, saying in trust in Russia could be lost.

An EU-brokered deal had been supposed to get supplies of Russian gas moving to Europe via Ukraine on Tuesday despite the pricing impasse, with international monitors in place to ensure Ukraine was not siphoning off gas, as Moscow has alleged.

It failed to break the deadlock and the row continues to disrupt supplies to 18 countries, forcing factories to shut down and leaving householders shivering in bitter winter cold.

EU monitors said no gas was flowing from Russia to Europe via Ukraine at all today.

Vladimir Putin's spokesman said the Russian prime minister would meet his Ukrainian counterpart Yulia Tymoshenko on January 17th, soon after returning from talks with Merkel in Berlin which are scheduled for tomorrow.

Frustration is growing in the EU at the failure of Russia and its former Soviet vassal Ukraine to resolve the row over how much Kiev should pay Moscow for gas or at least allow gas to flow to Europe while they argue it out.

"I think there is a risk that confidence in Russia could be lost in the long run," Merkel told a news conference in Berlin with British prime minister Gordon Brown.

The International Energy Agency said Russia had lost its status as a reliable gas supplier to Europe.

"The Russia-Ukrainian gas crisis is another wake up call to EU countries to restructure their energy issues," Fatih Birol, chief economist for the agency, which advises top industrialised countries on energy policy, told a news conference in Madrid.

Russian president Dmitry Medvedev has proposed holding a summit in Moscow this weekend with European importers of Russian gas to find a way out of the crisis.

The EU showed little enthusiasm for the idea.

A Moscow envoy of the Czech Republic, the EU presidency, said Europe was a better place for a meeting and the EU's executive arm said it should not serve as an excuse for delays in resuming the transit of Russian gas to Europe via Ukraine.

Brussels is concerned the summit could be a Russian attempt to divide the bloc, which has so far been relatively unified in its line in the dispute.

Turkey became the latest affected country to return from Moscow saying it did not know when the gas would start flowing.

Moscow has accused Ukraine of deliberately cutting gas to Europe while Kiev says Moscow is trying to use the wrong routes and to deny it gas to maintain pressure in the pipelines.

The European Union imports a fifth of its gas from Russia via Ukraine. The crisis has highlighted its vulnerability to disruption and sparked a new debate about diversifying supplies.

The row takes place against a backdrop of strained political ties between Moscow and Kiev. Russia is angered by the ambition of Ukraine's leaders to join the NATO alliance, and by their support of Tbilisi during the Russian-Georgian war in August.

Gazprom said it had again asked Ukraine to transit some 99 mcm of gas to Europe today, as it did on the previous two days. It said Kiev again denied access.

Ukraine says Russia is deliberately seeking to ship gas through Ukraine via a route that is being used to send Ukrainian reserves of gas the other way -- to the east of the country.

Gazprom has been using routes through other countries to raise exports to Europe but its total supplies are still half the usual export volumes in winter months.

Ukraine itself has yet to agree on prices for its own supplies. Moscow is seeking a sharp rise despite a drop in global prices and a severe downturn in Ukraine's economy.

European Commission chief Jose Manuel Barroso said the EU could advise its firms to sue Russian and Ukrainian firms if gas supplies were not restored.

The dispute has already cost Gazprom $1.2 billion and Smith said the losses were widening by $120 million every day -- half of which was destined to go into Russia's strained budget.

Reuters