Russia pushed Friday for greater international involvement in resolving its dispute with Ukraine as Kiev sought to retake some of the diplomatic initiative, hosting officials from three of its European neighbors for talks on the gas crisis.

It was unclear exactly what was to take place in Moscow on Saturday, although the Kremlin accredited reporters for unspecified media events and Prime Minister Vladimir Putin was scheduled to return from Berlin to hold talks with Ukrainian Prime Minister Yulia Tymoshenko.

EU Energy Commissioner Andries Pielbags and Czech Industry and Commerce Minister Martin Rima are expected to attend a summit on the Russia-Ukraine gas war in Moscow on Saturday afternoon, a spokesman for the Czech EU presidency, Tomas Bartovsky, told AFP.

Russia has called on European leaders to attend the summit, but Czech Prime Minister Mirek Topolanek said the EU should speak with one voice.

Croatian deputy prime minister Damir Polancec, Turkey’s Energy Minister Hilmi Guler and deputy prime minister Nazim Ekren will also attend the meeting.

Individual European governments have declined Russia’s invitation to send their leaders to the Moscow “summit,” with France saying notably that conditions would not be “ripe” until Russian gas flowed again through Ukraine.

Topolanek said an “exhausted” EU was trying to avoid “European delegations travelling to Moscow as hostages or supplicants”.

In Kiev, a planned summit of eastern European leaders on the crisis was replaced with a “meeting” bringing together the president of Slovakia, the Moldovan prime minister and the Polish foreign minister, the latest twist in a chaotic story that has major ramifications for European energy security.

Speaking in the Kremlin Friday, Russian President Dmitry Medvedev said the dispute between Russia and Ukraine on gas prices and debt payment had become far more than a bilateral issue.

“Unfortunately, this issue has gone beyond the bounds of bilateral relations,” Medvedev said.

“We are ready to look for any long-term solution. We hope Ukraine is ready to do the same and that our European partners will help bring about the necessary decisions.”

In Berlin, Putin went a step further, bluntly accusing the European Union of “de facto” support for Kiev.

“The position of the European Union, which is putting Russia and Ukraine on a par, constitutes de facto support of Ukraine, which is violating its transit obligations,” he told a press conference after talks with German Chancellor Angela Merkel.

France however rejected any European involvement in the standoff.

“This conflict is a bilateral and commercial dispute which has led in an unjustified way to an interruption in supplies to the European Union,” French foreign ministry spokesman Frederic Desagneaux said in Paris.

Before talks with Putin, Merkel through a government spokesman criticised both Russia and Ukraine for failing to meet their commitments to Europe and urged the two to resolve their “bilateral problems” quickly.

But Putin’s idea for a consortium of international companies appeared to gather pace, with Merkel describing a “test phase” under discussion with European gas companies. The consortium would bear some of the disputed costs of gas transit central to the dispute.

“I… spoke today with these companies, and I think there is a way, together with the companies (Russian) Gazprom and (Ukrainian) Naftogaz, to start a test phase” to resume gas imports, Merkel told reporters.

Putin also tried to sound upbeat as Russian officials worked on the plan with companies such as E.ON Ruhrgas of Germany and Italy’s ENI.

He even sounded unusually conciliatory towards Ukraine, saying Moscow wanted to “help” Kiev and that “we should not look for those who are right and those who are wrong. We should not politicise the situation.”

The crisis that began on January 1 with Russia cutting supplies to Ukraine in a payment dispute has meant no gas getting through Ukraine to a swathe of countries in eastern Europe and the Balkans, which have in turn struggled with little or no heating and the forced shut-down of factories.

The International Energy Agency said Russia’s reputation as a reliable supplier had been damaged and lamented that due to lack of gas, “industries are being closed at a time of already poor economic conditions; domestic and other consumers are suffering real hardship.”

The crisis has cost EU states hundreds of millions of dollars (euros).

AFP: Russia, EU, Ukraine set for gas talks

Czech Prime Minister Mirek Topolanek, who represents the EU, secured the agreement of Ukrainian Prime Minister Yulia Timoshenko in Kiev, after talks with Russian Prime Minister Vladimir Putin yesterday at his residence outside Moscow.

The gas shutdown, triggered by Russia’s dispute with Ukraine over prices and debt, renewed calls in Europe to develop nuclear power and alternative sources of energy. Fuel supplies are dwindling as temperatures as low as minus 15 degrees Celsius (5 degrees Fahrenheit) in the Balkans spur energy demand.

“In some eastern European countries people are sitting there without heating,” said Bernhard Jeggle, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart. “They’re in a pretty tough situation, but that should be over soon.”

The accord was signed yesterday in Moscow by Russian Deputy Prime Minister Igor Sechin, OAO Gazprom Chief Executive Officer Alexei Miller and Czech Trade Minister Martin Riman, according to Russian state broadcaster Vesti-24.

“Ukraine signed the protocol so that Ukraine is not a barrier for Russia to resume gas deliveries to the European Union,” Timoshenko told reporters. Topolanek said Ukraine had met all conditions for Russia to resume gas shipments.

Shuttle Diplomacy

Russia, Ukraine and the EU struck an accord in principle Jan. 8 on monitoring flows of the fuel, paving the way for the resumption of deliveries to the 27-nation bloc. Since then the deal has been held up by disputes on how to deploy monitors.

Earlier yesterday Topolanek said the Ukrainian leadership gave him verbal assurances that Russian experts will be allowed to monitor transit shipments in Ukraine, according to Vesti. At the same time, international monitors will check flows into the Ukrainian pipeline network from Russian territory, he said.

His role as EU mediator is reminiscent of French President Nicolas Sarkozy’s shuttle diplomacy between Moscow and Tbilisi during Russia’s invasion of Georgia in August. France, which held the EU presidency at the time, was instrumental in ending the five-day war.

Ukraine and Georgia, both former Soviet republics, have strained relations with Russia in their efforts to join the European Union and the North Atlantic Treaty Organization.

Gas Prices

Natural-gas prices in the U.K., Europe’s largest market, initially fell this week on speculation gas could soon be flowing again through Ukraine after EU officials brokered a deal. Gazprom halted transit flows on Jan. 7 after accusing Ukraine of diverting gas intended for other buyers for its own use, a charge denied by the country. Russian supplies to Ukraine itself were suspended Jan. 1 pending a new contract.

European Commission President Jose Barroso “warmly” welcomed the accord today. “We now need the gas to flow immediately to the EU,” Barroso said in an e-mailed statement released jointly with EU Energy Commissioner Andris Piebalgs. They said the monitoring teams “will start to do their work as soon as possible.”

A group of 17 EU monitors arrived in Ukraine and a further five were on their way to Moscow, the European Commission said in an e-mailed statement. Two Commission officials were included in the team sent to each country, while the remaining members were experts supplied by European gas companies.

Monitoring Teams

In Ukraine the monitors were dividing into five teams, two of which would travel to the eastern border where the gas arrives near Sumy and Novopskov, two to the western border where it exits near Uzhhorod and one to a dispatching center to coordinate information.

Gazprom is ready to start work resuming gas shipments to European customers via Ukraine as soon as it has confirmation of the accord’s signature, Miller said in a statement yesterday. He said the company had planes waiting to fly experts to the pumping stations. It would first send minimum volumes needed, mainly to Balkan countries, and increase the amount quickly once it was sure Ukraine was not siphoning any fuel.

Once Russia resumes shipments, it will take 36 hours for the gas to start reaching European consumers. Supplies to at least 20 nations have been affected.

Gazprom’s European customers receive 80 percent of supplies through pipelines that cross Ukraine. The Russian exporter, which provides a quarter of Europe’s gas, said its overall deliveries to Europe were cut by about 60 percent on Jan. 7.

European Supplies

Bulgaria, Hungary and Slovakia were among eastern European countries that maintained curbs on gas use on Jan. 9. Most countries in western Europe have suffered less from the cutoff, tapping stockpiles and alternative supplies to meet demand.

Temperatures were forecast to fall as low as minus 11 degrees Celsius in Zagreb and minus 15 degrees Celsius in Sofia this weekend, according to AccuWeather.com.

NAK Naftogaz Ukrainy Chief Executive Officer Oleh Dubina returned to Kiev yesterday from Moscow after three days of talks on his country’s dispute with Russia on the price Russian wants to charge for 2009 gas deliveries to Ukraine.

“Russia offered us $450 per 1,000 cubic meters, a rate which doesn’t correspond to a European price, and a rate which we cannot accept,” Dubina said in a statement posted on the government’s web site. There is no plan for Dubina to return to Moscow and Naftogaz said “further talks should be conducted by top politicians.”

Ukraine paid Russia $179.50 per 1,000 cubic meters for gas last year.

Energy Alternatives

The dispute, over transit fees and debt as well as the gas price, has come as Ukraine’s leaders, Timoshenko and President Viktor Yushchenko, are facing a financial crisis that has forced them to seek a $16.4 billion International Monetary Fund bailout.

In 2006, Russia turned off all Ukrainian gas exports for three days, causing volumes to fall in the EU, and also cut shipments by 50 percent last March during a debt spat.

The Slovak government yesterday approved the restart of a nuclear reactor, in the face of opposition from the European Union, to meet the country’s energy needs as the halt in Russian gas supplies continued.

Prime Minister Robert Fico told reporters the move would be for a “necessary” period until the gas market stabilizes. The reactor in Jaslovske Bohunice was closed Dec. 31 as part of the conditions imposed on Slovakia when it joined the EU.

The Polish government will also decide next week on building nuclear power plants in Poland, according to Tomasz Misiak, a member of Poland’s ruling party Citizens’ Platform and chairman of Senate’s economy committee.

Bloomberg.com: Worldwide

Gazprom said gas supplies to Ukraine would be cut on Thursday but that Russia would do its best to guarantee supplies to Europe.

Russian Prime Minister Vladimir Putin earlier said that Ukraine would block supplies to Europe if no deal was done.

Ukraine denies owing money to Gazprom, and says it has guaranteed gas transit.

The European Commission said Ukrainian Prime Minister Yulia Tymoshenko had given her assurances that there would be “no disruption of gas supplies to clients in the European Union”.

In an announcement which came before the official deadline for the close of the talks, Gazprom said it would cut Ukraine’s supply from 0700 GMT on Thursday.

“The debt to Gazprom for gas supplied earlier was not paid. Despite verbal statements from Kiev, Gazprom did not see any money in its account,” said Gazprom’s chief executive Alexei Miller in a live television briefing.

He criticised Ukraine’s stance during the negotiations as “unconstructive”, and said Gazprom had no legal reason to continue supplying gas to Ukraine.

Mr Miller said the contract to supply gas depended on the full settlement of £2bn in gas bills and late-payment fines levied by Gazprom.

He also suggested that Kiev was seeking to provoke a wider dispute, saying he was “forming the impression that there are political forces in Ukraine which are very eager to see a gas conflict between our two countries”.

A similar row between Gazprom and Ukraine in 2006 led to gas shortages in several EU countries.

‘Unconstructive’

A spokesman for Ukrainian state energy firm Naftogaz, Valentin Zemlyansky, confirmed that the negotiations were over.

Naftogaz said it has paid $1.5bn (£1bn) in outstanding bills to RosUkrEnergo – a Switzerland-registered gas trading company which is acting as an intermediary – but not the fines imposed by Gazprom.

“Europe will receive all the gas Russia supplies it with,” the agency quoted Bogdan Sokolovsky, the Ukrainian president’s representative on energy issues, as saying.

Gazprom is the world’s largest gas producer and supplies a quarter of the European Union’s gas needs, or 42% of the EU’s gas imports, much of it via Ukraine.

Russia’s Vladimir Putin had earlier warned Ukraine not to disrupt the transit of gas to Europe.

He warned of “very severe consequences” for Ukraine in terms of its relations with both Russia and European countries.

Mr Putin said Gazprom had been generous in offering Ukraine a price of $250 per 1,000 cubic metres of gas in 2009, given that the price in Europe was currently more than $500.

He said he understood that Ukraine was in “a difficult economic situation” which was worse than Russia’s, but put the dispute down to a “war of the clans” between the Ukrainian Prime Minister, Yulia Tymoshenko, and President Viktor Yushchenko.

BBC NEWS | Europe | Russia-Ukraine gas talks collapse

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