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Russia and Ukraine make progress on gas dispute

October 17, 2014

Moscow and Kyiv have reached a tentative gas deal aimed at resuming Russian supplies to Ukraine ahead of the cold winter months. The EU-brokered talks in Milan followed a Russian warning of gas flow disruptions.

Merkel with Poroschenko and Putin
Image: Reuters/Daniel Dal

Friday saw a major breakthrough in dispute over gas supplies from Russia to Ukraine and possibly to much of Europe. Ukrainian President Petro Poroshenko, however, showed optimism on Friday and said that the talks in the Italian city of Milan had seen some progress.

"We have some progress on the gas issue," Poroshenko said, adding that the "basic parameters" of a new deal with Moscow had been agreed upon. Further discussion on the financial side of the agreement would continue, the President said.

Poroshenko also said that his meetings with his Russian counterpart Vladimir Putin and the French and German leaders had made some headway in defusing the crisis reminiscent of the Cold War hostility.

Russia had blocked off gas supplies to Ukraine in the summer over unpaid bills raising the risks that Ukraine would siphon off gas from the pipeline passing through its territory from Russia to Europe. Europe is worried that if the Kyiv authorities opted for that, Moscow would cut off everything that flows through Ukraine, leaving parts of Europe without supplies in the harsh winter season.

One-third of Europe's gas needs are fulfilled by Russia. Half of this gas is transported via pipeline through Ukraine. Previous conflicts over payments in 2006 and 2009 led to sharp spikes in gas prices.

According to the deal, Kyiv is likely to pay 2.4 billion euros ($3.1 billion) to Russia's state gas company, Gazprom, to compensate for the unpaid bills before the end of October. In exchange, Gazprom will unblock its Ukraine supplies.

The European Union's energy commissioner, Guenter Oettinger, will visit Ukraine on Monday ahead of the trilateral EU-Russia-Ukraine talks on the gas dispute in Brussels the following day.

Putin and Poroshenko begin talks

Meanwhile, Putin and Poroshenko have begun another round of one-on-one talks on Friday on the sidelines of an Asia-Europe (ASEM) summit to resolve the ongoing armed conflict in Ukraine.

At least 2,000 people have died in eastern Ukraine since fighting broke out last April between government forces and pro-Russian separatists. A fragile, if oft broken, ceasefire has reduced the number of casualties from fighting in Ukraine.

Earlier on Friday, European leaders, who joined Putin and Poroshenko in Milan at a breakfast meeting, said they were on the same page on how to pursue deals on enforcing a ceasefire, border controls and elections in Ukraine.

"We are closer together on some questions of detail, but the central point is whether the territorial integrity of Ukraine is really respected," German Chancellor Angela Merkel said after the talks.

shs/es (AFP, Reuters, dpa)