Russia Says Open to Gas Talks With Ukraine, Offers Discount

Gas processing plant
Shebelinka gas and gas liquids processing plant in Kharkiv region. Konstantin Grishin/Reuters

Russia is open to talks on resuming gas supplies to Ukraine and willing to offer a price cut of nearly 20 percent, Energy Minister Alexander Novak said on Friday, but the discounted price is still above the level Kiev demands.

Russian President Vladimir Putin agreed late last year to cut the gas price for Ukraine to $268.50 per 1,000 cubic meters after then-Ukrainian President Viktor Yanukovich said he would drop a planned trade agreement with theEuropean Union in favor of joining a Russian-led Customs Union.

But Yanukovich was toppled by mass protests in February, and Moscow hiked the price to $485, which was rejected by Kiev. Russia cut off the gas flow in mid-June after the two sides failed to agree on pricing and debts owed for previous gas supplies.

Novak said after meeting European Energy Commissioner Guenther Oettinger in Moscow that Russia was ready to apply a retroactive discount of $100 per 1,000 cubic meters for April-June. Ukraine has insisted on returning to the old price of $268.50, while signaling it might agree to pay just above $300.

Relations between the two former Soviet republics are in crisis. Kiev accuses Moscow of sending soldiers intoUkraine to back pro-Russian separatist rebels, something Russia denies.

But Novak said Moscow was prepared for new gas talks. "We will agree the date for a trilateral meeting at the beginning of next week," he said.

Despite the cut-off to Ukraine, Russian gas has been flowing normally across Ukraine to Europe, which receives about half its imports of Russian gas via this route.

Novak said Kiev might start siphoning off some of this gas in the coming winter if it fails to add to its storage facilities before then. He said Ukraine had stockpiled up to 16 billion cubic meters but needed to pump as much as 10 billion more into storage.

There was no immediate comment from Kiev.

Oettinger told the same briefing that gas must not be used as a weapon in the Ukraine-Russia crisis.

He said the two sides and the European Commission needed to work out an interim solution, given that international arbitration would not be able to resolve the pricing and debt dispute before the middle of next year.

Russian gas exporter Gazprom has said Ukraine owes it more than $5 billion in unpaid bills.

"We always said that through the crisis we don't see the gas sector as a tool for sanctions, measures and escalations. That is also true today," Oettinger said.

In 2013 Russian gas accounted for half of the total gas consumed in Ukraine.