Russia-Ukraine gas deal likely after EU-brokered talks in Berlin | Business| Economy and finance news from a German perspective | DW | 26.09.2014
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Russia-Ukraine gas deal likely after EU-brokered talks in Berlin

The EU has come closer to an interim solution to the gas row between Russia and Ukraine at talks in Berlin. It came up with a plan to avert a gas supply crisis as Russia had threatened cuts in deliveries.

A top European Union official proposed a deal under which Ukraine would undertake to pay part of its gas debt to Russia, while Russia would guarantee to deliver gas over the winter, AFP news agency said after talks in Berlin.

EU Energy Commissioner Guenther Oettinger had suggested after meeting the Ukrainian and Russian energy ministers that Kyiv undertake to pay $2 billion (1.6 billion euros) to Moscow by the end of October and another $1.1 billion by the end of December.

In exchange, Russian gas company Gazprom would supply at least 5 billion cubic meters of gas to Ukraine over the coming months at $385 per 1,000 cubic meters.

Follow-up talks planned

AFP cited Oettinger as saying he wanted to have clarity next week on whether the two sides accepted the deal as he planned to bring them together again in Berlin late next week.

Russian negotiators said after the talks that an interim deal mediated by the European Union could be the basis for a solution over the winter, though Russia would only supply Ukraine once pre-payments were made.

Russia cut off gas supplies to Ukraine in June because of a dispute over Ukraine's unpaid gas bill. According to an EU estimate, Ukraine needs 5 billion to 20 billion cubic meters (bcm) of gas in the coming months, depending on how cold the winter is.

Dire Russian warnings

Russian Energy Minister Alexander Novak warned Friday that the EU Commission risked scuppering a deal if it were to continue supplying gas to Ukraine via reverse flows through Poland and Moldova.

In an interview with the German business daily Handelsblatt on Friday, Novak said Moscow would meet all its contractual commitments to the EU.

"But the agreed contracts do not foresee a re-export," he said.

"We hope that our European partners will stick to the agreements. That is the only way to ensure there are no interruptions in gas deliveries to European consumers," Novak added.

Hopes on Norway slimming

As the specter of Russian gas cuts looms larger in Europe and Ukraine, Norway on Thursday dampened hopes it could offset a potential shortfall in supplies.

Norway is the second biggest supplier of gas to the EU after Russia, and is therefore one of the short-term options Brussels is looking at in case of a cut-off by Moscow.

Following talks with Oettinger in Brussels on Thursday, Norwegian Energy Minister Tord Lien said the country's gas pipeline capacities were "fully utilized" in the winter. All Norway could promise was a slight increase in production, he said.

"But of course if a more strenuous situation should develop, the prices will probably increase and the operators on the continental shelf will do what they can to bulk up their friends in Europe and maximize their own profit and hence deliver more gas," he told a news conference.

Norway supplies 34 percent of the EU's gas imports - second to Russia which accounts for 39 percent and ahead of Algeria with 13 percent.

uhe, hg/cjc (Reuters, AP, AFP, dpa)