Russia and Ukraine in talks to end gas deadlock
By Roman Olearchyk (Kiev) and Isabel Gorst (Moscow), Financial Times, December 29 2008
An energy delegation from Ukraine arrived in Moscow on Monday for last-ditch talks aimed at resolving a gas debt dispute with Russia that could disrupt the supply of gas to Europe.
Gazprom, Russia’s state-controlled gas group, has demanded that Ukraine settle $2bn of arrears for gas supplies this year or face a cut-off in deliveries from January 1.
The ex-Soviet countries are gearing up for a fourth energy stand-off in as many years, but have assured consumers in Europe that supplies will not be disrupted as happened during a 2006 dispute.
Officials in Europe, which receives a quarter of its supplies from Russia and the bulk of this via Ukraine’s vast pipeline system, have urged Moscow and Kiev to find a compromise.
A Gazprom spokesman said talks with Naftogaz, the Ukrainian state gas company, would begin late on Monday after Gazprom winds up a board of directors meeting where the debt dispute would be discussed.
Yuriy Prodan, Ukraine’s energy minister, said there was still “hope” the debt would be settled and an agreement reached before New Years Eve.
Gazprom said there was a “50:50 chance” that the dispute would be resolved by the new year.
The company has warned European buyers that Ukraine might respond to a supply cut by siphoning gas from transit pipelines.
But a spokesperson for Naftogaz said Ukraine had stockpiled enough gas to meet its own needs and ensure a stable supply to Europe “throughout the winter period.”
Analysts said Ukraine had more leverage than in previous disputes because Gazprom was in a hurry to clinch supply contracts for 2009 before gas prices fall amid shrinking demand.
Gazprom appeared open to compromise at the weekend, offering to restructure Ukraine’s debt as pre-payment for gas transit fees or to take back gas stockpiled in Ukrainian storage facilities.
Dmitry Medvedev, Russia’s president, took a tough line last week, warning Ukraine to pay its gas debt “to the last rouble” or risk Russian economic sanctions.
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