Gloomy EU frets over gas supply resumption

Posted at 01/15/09 5:20 PM

MOSCOW/KIEV - European states saw little prospect of renewed gas supplies from Russia on Thursday, although Moscow and Kiev said they were ready to meet for further talks aimed at resolving the stand-off.

An EU-brokered deal had been supposed to get supplies moving on Tuesday, with international monitors in place to ensure that Ukraine was not siphoning off gas, as Moscow has alleged.

But 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 a bitter winter cold.

After high-level talks in Moscow and Kiev, Slovak Prime Minister Robert Fico expressed growing frustration within the EU at the failure of Russia and its former Soviet vassal Ukraine to resolve their differences over debts and pricing.

"I cannot imagine what would have to happen within 24 hours, or 48 hours, for the gas transit to resume," Fico said on his return from Moscow, where he and Bulgarian Prime Minister Sergei Stanishev met Russian Prime Minister Vladimir Putin.

"It is practically impossible. The conditions laid by one and the other side are so contrasting that this simply cannot work," he told a news conference.

Early on Thursday, the Ukrainian government press service said that Ukrainian Prime Minister Yulia Tymoshenko and Putin had agreed in a midnight telephone conversation that their governments would meet at the weekend.

"In the conversation, an agreement was reached to hold talks on Saturday in Moscow between the governments of the two states on the gas issue," the press service was quoted by local news agencies as saying.

But both Tymoshenko and Russian President Viktor Yushchenko separately had said on Wednesday that they would not travel to Moscow but supported a gas summit in a European capital.

The powerful Russian prime minister could also be absent from Moscow on January 17 because he is scheduled to meet German Chancellor Angela Merkel in Germany.

Paolo Scaroni, CEO of Italy's ENI -- one of dozens of major energy firms concerned over the supply disruptions and anxious for a quick resolution -- was to meet with officials of Russia's Gazprom gas export monopoly in Moscow.

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

European Commission chief Jose Manuel Barroso called the situation "unacceptable and incredible" and said the EU executive would advise the bloc's firms to sue Russian and Ukrainian energy companies unless gas supplies were restored quickly.

Gas hostage

Slovakia's Fico said his country would attend the meeting if Ukraine were present and if the EU were involved in the talks.

"The talks in Kiev and Moscow showed that the dispute between Ukraine and the Russian Federation is very deep, is political in principle, and it seems not even the European Union is able to immediately resolve it," he said.

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.

Russia resumed pumping gas meant for Europe via Ukraine on Tuesday but the EU said little or none was flowing to countries downstream suffering urgent energy shortages.

Russia accused Ukraine of deliberately cutting gas to Europe while Kiev said Russia had so far provided so little gas there was not enough pressure in the pipelines to pass it on.

Frustrated EU leaders told Moscow and Kiev their credibility as reliable energy partners was at stake. Bulgaria's Stanishev told Putin the long-running dispute "should not turn third countries into hostages."

Fico delivered a similar message in Kiev to his Ukrainian counterpart Tymoshenko, who replied that Ukraine was just as much a hostage as the European Union.

Putin urged EU leaders to increase pressure on Ukraine, whose pro-Western leadership has angered Moscow by seeking to join the U.S.-led NATO alliance.

Gazprom demands Kiev pay $614 million in unpaid gas bills and $450 per 1,000 cubic metres of gas in 2009. That is similar to rates paid by EU customers but a big rise on last year's price of $179.5.