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Sep 26, 2014 7:08 AM

Russia, Ukraine in talks on gas as winter looms

The Associated Press

BERLIN (AP) Russia and Ukraine are holding talks to solve their long-running gas dispute as pressure mounts for a solution to head off a winter supply crisis in Ukraine and beyond.

Friday's meeting in Berlin between the Russian and Ukrainian energy ministers, brokered by EU energy commissioner Guenther Oettinger, comes more than three months after Moscow cut off gas supplies to Kiev.

The dispute, part of a wider conflict over Ukraine's relations with Russia and the West, involves the price of Russian gas supplies and Kiev's historic gas debts.

A sense of urgency is beginning to mount. Much of the Russian gas supplied to EU countries passes through pipelines that cross Ukraine.

"European and Ukrainian energy and gas supplies are very closely connected with each other," German Chancellor Angela Merkel said this week. "Winter is nearing, so time is pressing."

Russia shut off supplies to Ukraine this summer but still allows gas to transit through its pipeline network to customers in the rest of Europe. Poland, Hungary and some other European countries have been selling some of their gas to Ukraine via so-called "reverse flow" shipments, which Moscow dislikes.

Recently, some of these countries have had trouble supplying Ukraine with gas as they build their own reserves ahead of the winter and amid reports of tighter controls by Russia. Poland this month halted deliveries for a week, citing inadequate supplies from Russia.

On Thursday, Hungarian pipeline operator FGSZ said it suspended deliveries to Ukraine for an indefinite period, citing the need for technical work to "manage the security supply" in the face of increasing demand.

Russia stopped gas deliveries to Ukraine after the two sides failed to agree on a formula for paying what Russian gas giant Gazprom said this month are $5.3 billion in gas debts, and Moscow demanded upfront payments for future supplies. The two sides have also failed to bridge differences over the future gas price for Ukraine, with Kiev insisting on a lower price than Moscow offered.

Previous three-way talks failed to avert the gas cutoff.

Oettinger told reporters in Brussels on Thursday that the goal is "to get a real constructive and coherent answer" to the dispute. "I do always expect good results, so for tomorrow as well," he said.

EU member states got 24 percent of their gas in 2012 from Russia, according to industry association Eurogas, and about half of that goes through the pipelines across Ukraine. In 2013, Ukraine imported nearly 26 billion cubic meters of gas from Russia, just over half its annual consumption.


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