Russia, Ukraine energy chiefs hold crisis talks

January 8, 2009

, MOSCOW, January  8 – Russian and Ukrainian energy chiefs held talks in Moscow overnight on Thursday for the first time since the start of a gas crisis that has seen gas supplies cut off across Europe in a bitterly cold winter.

The two leaders, Alexei Miller, head of Russian energy giant Gazprom, and Oleg Dubina, head of Ukraine\’s Naftogaz, were set to meet again later on Thursday at an emergency EU-brokered meeting in Brussels.

"Tonight in Moscow talks took place between Alexei Miller and Oleg Dubina during which they discussed ways to end the intensifying crisis situation," Gazprom spokesman Sergei Kupriyanov told Russian news agencies.

No further details were immediately available but Dubina and Miller had last met on December 31 for talks that failed to find any agreement.

Russia has subsequently cut off gas supplies to Ukraine and later to Europe via Ukraine after accusing Kiev of blocking the transit of gas to Europe.

Announcing the EU\’s hastily-arranged crisis talks, European Commission chief Jose Manuel Barroso said Wednesday the meeting would focus on the use of monitors to verify the flow of Russian gas through Ukraine to European clients.

The organisation of the Brussels talks brought some badly-needed focus to a chaotic dispute that began as a commercial disagreement between Gazprom and Naftogaz and has mushroomed into a full-blown international crisis.

"It\’s possible that they may agree," Alexander Gudima, an advisor on energy to Ukrainian Prime Minister Yulia Tymoshenko, told AFP on the eve of the Brussels talks in comments that suggested there could be a deal.

While Russia and Ukraine have exchanged accusations of guilt, more than a dozen countries that rely heavily on Russian gas, most of them in the EU, have reported huge drops in gas supplies in the depths of a bitterly cold winter.

Slovakia and Romania have declared states of energy emergency, Bulgaria has ordered gas rationing for industry and Hungary and Croatia and Bosnia reported two consecutive days of complete stoppage of Russian gas supply.

Tens of thousands of people have been left without heating in their homes.

Gazprom ordered delivery of gas to Ukraine itself halted on New Year\’s Day after it failed to reach agreement with Naftogaz on payment of arrears for Russian gas already used by Ukraine and on prices for supply in 2009.

The move triggered a chain reaction: Russia accused Ukraine of "stealing" gas it was trying to ship to Europe and Ukraine countered that Russia had deliberately reduced supplies to provoke a crisis.

On Wednesday, Gazprom ordered a halt to gas shipments through Ukraine, asserting that Ukraine had already shut down all the pipelines that get the gas to Europe and accusing Kiev of diverting the gas for its own use illegally.

On the eve of the Brussels meeting, Russian President Dmitry Medvedev, in a telephone conversation with Ukrainian President Viktor Yushchenko, laid down a number of conditions for any resumption of Russian gas shipments via Ukraine.

They included a demand that Ukraine begin paying market prices for Russian gas immediately — Russia has long sold gas to Ukraine at discounted prices — and an independent EU monitoring plan to verify gas flows through Ukraine.

Catarina Walsh, an energy analyst at IHS Global Insight, said both Moscow and Kiev have "played their expected hand in this high-stakes poker match" and can "get down to the business of striking a deal to end the dispute."

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