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Ukraine, Russia ready for gas talks, EU watches

Ukrainian Prime Minister Yulia Tymoshenko and Russia's Vladimir Putin readied on Thursday for talks which the European Union hopes will avert a possible new conflict disrupting supplies of Russian gas to EU consumers.

The two leaders brokered a deal last January ending a conflict over gas pricing which led to Russian gas flows to Europe via Ukraine being halted for two weeks in mid-winter.

Millions in southern Europe were left without heating.

But relations between Russia and the former Soviet republic have slid further in the run-up to a presidential election on January 17, and the outcome of the talks, in Yalta, southern Ukraine, was difficult to read.

The gas deal has become mired in infighting in Ukraine between Tymoshenko and her rival, President Viktor Yushchenko.

And though Ukraine has so far settled all its bills on time, Tymoshenko has conceded that, given the dire state of the economy, meeting the monthly payments for gas is a struggle.

She says however that the 10-year supply contract agreed with Russia does not have to be revised and provides for stable supplies of gas in 2010.

Putin, though, has raised the temperature around the talks, due to take place later on Thursday, with a warning that Russia will cut gas deliveries again if Ukraine stops paying on time or siphons off transit gas.

A Putin aide said on Wednesday that the Russian leader, who is taking with him a heavyweight team including Gazprom's CEO Alexei Miller, was “"pressing all the pedals” in an attempt to sort out gas problems with Ukraine.

Russian supplies across Ukraine provides Europe with a fifth of its gas and earlier this week an anxious EU agreed with Russia an “early warning” mechanism to shield Europe from potential energy supply cuts in the event of further cuts.




In Brussels, Ukraine's ambassador to the EU, Andriy Veselovsky, said that if Russia completely halted supplies Ukraine would not be able to send gas to Europe from its storages.

Ukraine has built up stockpiles of around 27 billion cubic meters of gas, which could be used to supplement flows of Russian gas to Europe but not replace them, said Veselovsky.

“Our storages cannot serve Europe when gas does not come from Russia. Maybe they can be additional, but they cannot substitute,” he told a policy briefing in Brussels.

Just hours before talks were due to start, Yushchenko, who has constantly sniped at Tymoshenko for accepting last January's deal, appealed to Russian President Dmitry Medvedev to revise the agreement which he said was too onerous for the Ukrainian economy. He believes the price accepted for Russian gas was too high while transit fees coming to Ukraine were pitched too low.

In an open letter to the Kremlin chief, published on his website, Yushchenko said: “Keeping the contracts unchanged ... will create potential threats specifically to the reliability of supplies of gas to Ukraine and its transit to other European states.”

Yushchenko later said, at a news conference with visiting Georgian President Mikheil Saakashvili, that his appeal to Medvedev was not politically motivated but had been sent on strictly economic grounds.

But Medvedev last summer publicly wrote off relations with the pro-western Yushchenko, accusing him of pursuing anti-Russian policies, and the Ukrainian president's plea seemed certain to go unheeded. (Reuters)