Russian Prime Minister Vladimir Putin said on Friday that Moscow was nearing a deal to deliver gas to European customers after a contract dispute with Ukraine that has cut supplies since the start of the year. "We are approaching interesting agreements which could lead to a solution," Putin said at a news briefing with German Chancellor Angela Merkel.
He was referring to a deal with a consortium of European energy companies to provide technical gas, which is needed to pressurise the pipeline network and allow supplies to be pumped from Russia to Europe through Ukraine. The gas pricing dispute between Russia and Ukraine, which has disrupted transit gas supplies, has also raised questions in the West about Europe's heavy reliance on Russian gas. The European Union imports a quarter of its gas from Russia and 80 percent of its supplies go 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.
Putin, on a visit to Germany for talks with Merkel on the gas crisis, was also meeting European gas firms seeking to help restore deliveries to the continent. "We approached our main Western partners - E.ON Ruhrgas, Gaz de France, ENI and our Austrian partner - with a request to share the risk of supplying technical gas to Ukraine," Putin said. "In the course of discussions yesterday and today, I have understood that our partners agree with this proposal."
But Germany's E.ON Ruhrgas said further talks were needed. Merkel made clear she expected Russia and Ukraine to resolve their differences. "I think it is in Russia's interests that gas be delivered to western Europe," Merkel said, to which Putin, a former KGB officer in East Germany, responded: "Jawohl!"
Putin also said it was intolerable that Russia be expected to supply the technical gas at its own expense when it was not to blame for the supply disruptions. Russian energy giant Gazprom had earlier outlined the deal to supply gas that Ukraine's state energy company says it needs pumped into its pipeline system to restore pressure. "We will sell this gas at the prevailing market price. The price will be around $450 (per 1,000 cubic metres)," Gazprom Deputy Chief Executive Alexander Medvedev said.
EU PRESSURE Putin's forecast of a deal came as the European Union piled pressure on Russia and Ukraine to resolve their dispute. Putin is to meet Ukrainian Prime Minister Yulia Tymoshenko in Moscow on Saturday. "The European Commission believes that the meetings in coming days offer the last and best chance for Russia and Ukraine to demonstrate they are serious about resolving this dispute," Commission spokesman Johannes Laitenberger said. "The gas must flow. We will regard this period as a test case for judging whether or not they are credible partners."
Paolo Scaroni, chief executive of Italian energy giant Eni SpA who was present at the Berlin meeting, said he intended to agree on concrete proposals to solve the gas dispute within hours. Eni is Europe's leading gas operator and largest user of the Ukraine pipeline. Other European firms involved included France's GDF Suez and E.ON Ruhrgas.
The supply of gas to restore pressure in Ukrainian pipelines could allow gas supplies to Europe to get under way immediately, leaving the question of reimbursement for the consortium's gas on hold until an agreement between Ukraine and Russia on their price dispute is reached. Putin and Tymoshenko's Moscow talks on Saturday aim to resolve the row, which has cut gas supplies to 18 states.
There was little enthusiasm in Brussels for a separate Moscow meeting with importers proposed by Russian President Dmitry Medvedev. But the EU executive said it and the Czechs - current holders of the EU presidency - would attend if Russian and Ukrainian leaders were there too. Frustration is growing in the EU at the failure to resolve the row.
"It is clear today, even if they turn on the taps tonight and gas starts to flow, there has been irreparable, irreversible damage done, a loss of confidence in both Russia and Ukraine," said Martin Riman, Czech industry and trade minister. An EU-brokered deal was supposed to get supplies of Russian gas moving to Europe via Ukraine on Tuesday despite the pricing dispute. EU monitors are in place to ensure Ukraine does not siphon off gas, as Moscow has alleged it has done.
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