Russia-Ukraine Gas Talks Resume as Putin and Merkel Speak

Russia gave Ukraine an extra six days to begin payments in a gas-supply deal with the European Union as the parties prepare to resume talks today in Brussels.

The new deadline is June 16, Sergei Kupriyanov, a spokesman for Russian state gas exporter OAO Gazprom, said today by phone. Negotiations between Russian Energy Minister Alexander Novak, his Ukrainian counterpart Yuri Prodan and EU Energy Commissioner Guenther Oettinger will restart at 9:30 a.m. local time and will follow bilateral meetings, the European Commission said in a statement yesterday.

The EU, dependent on Russian gas piped through Ukraine for about 15 percent of its supplies, is trying to broker a deal to maintain shipments amid a dispute over payments for the fuel and territorial claims. In Ukraine, government forces and rebels claiming allegiance to Russia continued to clash in the east of the country.

Oettinger is optimistic an agreement to end the gas price dispute can be arrived at in the next few days, he told reporters last evening. The talks were postponed from yesterday evening because of the late arrival time of the Russian delegation to Brussels, the EU said.

‘Constructive Position’

Russian negotiators are “authorized to continue the discussion with a constructive position, with a view to achieving a mutually acceptable agreement” despite difficulties, the Kremlin’s press service said in an e-mailed statement after Russian President Vladimir Putin and German Chancellor Angela Merkel discussed the matter by phone.

Novak and Gazprom Chief Executive Officer Alexey Miller met in Moscow with Putin before they departed for the Belgian capital, said an official who asked not to be identified as the gathering was private. Gazprom declined to comment when contacted by Bloomberg.

This month, Gazprom said Ukraine should settle its debt or pay for gas upfront, with the threat of being cut off should it fail to meet the deadline. Ukraine owes $1.5 billion to Russia for fuel supplied in November and December last year and $3 billion for April and May, according to Gazprom.

Ukraine disputes the sum and the price, which Russia raised by 81 percent in April. Gazprom had already extended the payment deadline from June 2 after receiving $786 million for supplies made in February and March.

“I asked the company to postpone this with the hope of reaching an agreement,” Putin said on June 6 after a first meeting with new Ukrainian President Petro Poroshenko in France.

Gazprom and NAK Naftogaz Ukrainy have been at loggerheads over both debt for past supplies and the level of future prices.

In April, Gazprom rescinded a price discount granted in December because of Ukraine’s mounting debts, while Russia stripped its neighbor of a 2010 export-duty break that it exchanged for a lease on its Black Sea fleet’s port in Crimea, which Putin annexed in March.

Ukraine has refused to pay the increased price of $485 per thousand cubic meters, instead demanding a return to the first-quarter level of $268.50.

(Source: Bloomberg)