Yushchenko meets Putin with EU gas shut-off deadline hours away

Business Materials 12 February 2008 14:27 (UTC +04:00)

( dpa ) - Ukrainian President Viktor Yushchenko flew to Moscow on Tuesday to meet with Russian President Vladimir Putin, with a deadline for a shut-off of Russian gas supplies to the European Union only hours away.

Russia's national gas monopoly Gazprom has threatened to cut Ukraine off from all natural gas supplies as of 1500 GMT Tuesday, if Ukraine fails to pay 1.5 billion dollars in outstanding bills.

The European Union receives some 80 per cent of its Russian natural gas imports via Ukrainian pipelines.

Yushchenko in remarks to the press prior to his departure said resolution of the dispute would be a "top priority" in his talks with Putin.

Putin and Yushchenko were set to meet in private immediately after the Ukrainian president's arrival, the Interfax news agency reported.

Meetings between Russian and Ukrainian diplomatic delegations were also scheduled within the framework of the one-day state visit.

The present row between Ukraine and Russia on gas payments stems in large part from an attempt by Yushchenko's government to exclude two middleman companies partially owned by Gazprom, which enjoys monopoly rights to sell natural gas in Ukraine.

Gazprom officials on Monday said a change in the terms of the delivery contract might be possible, but Ukraine needed to pay up its debt first.

Ukrainian officials said it was unlikely the Putin-Yushchenko talks would resolve the dispute fully, as detailed negotiations were necessary to determine the precise size of the debt - a task complicated by the fact that Gazprom markets not only relatively expensive Russian, but cheaper Central Asian gas to Ukraine.

"We have a clear legal basis showing the difference in prices (between Russian and Central Asian gas), and I think that will give us powerful arguments with the Russian Federation," said Raisa Bohatyrova, Ukraine's National Security Council chairwoman.

Gazprom executives for their part have argued the present Ukrainian debt stems from Russia's selling Russian not Central Asian gas to Ukraine in recent months, as a result of poor weather in Central Asia.

Russo-Ukrainian differences on how much Ukraine should pay Gazprom for gas deliveries have been chronic for nearly two decades, but the first dispute-linked cut-off came only in late 2005.

Gazprom in December 2005 declared Ukraine shut off from gas supplies because of a pricing dispute, but continued to sent reduced volumes of gas into Ukrainian pipelines so as continue fuel deliveries to EU consumers.

The Ukrainians retaliated by siphoning a portion of the gas destined for Europe as transport charges. Gas retail prices as far away as France spiked as a result.