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EU in bid for new gas monitoring deal

Moscow, January 10, 2009

The European Union sought to finalise details of a gas monitoring deal to allow the resumption of gas supplies to Europe via Ukraine, which have been cut off for days over a pricing row.

But the Czech EU presidency was downbeat about prospects for an agreement on Friday, dimming hopes of an early resolution of the nine-day crisis which has cut supplies to thousands of homes in the Balkans and businesses in the depths of a cold winter.

"It is highly possible that we have to say today that not everything is finalised," Martin Riman, the Czech industry and trade minister, said.

He arrived in Ukraine with Czech Prime Minister Mirek Topolanek to try to thrash out a deal on the fine print of a deal on supervising gas flows from Russia.

Topolanek was expected to fly on to Moscow today for talks with Vladimir Putin, a spokesman for the Russian prime minister said.

The presence of monitoring missions along the transit routes for Russian gas will reassure Moscow that the gas it pumps across Ukraine is not being siphoned off by Kiev.

Moscow cited this allegation - denied by Ukraine - as its reason for shutting off gas through its ex-Soviet neighbour earlier this week.

The EU gets a quarter of its gas supplies from Russia, 80 per cent of which pass through Ukraine. So far, supplies to 18 countries have been disrupted by the dispute.

Alexei Miller, head of Russia's state-controlled gas monopoly Gazprom, said Ukraine had given verbal agreement for deployment of the monitors.

"As soon as the document has been signed... and observers are ready for practical work on the gas stations, transit of gas via Ukraine will be possible," he said.

The European Commission said a team of 20 observers, including experts from major gas companies and senior officials from the EU, had already arrived in Ukraine and begun work.

Naftogaz and Gazprom traded accusations yesterday that their own monitors were being refused access by the other side. Even once the monitors are in place, it could take days before Russian gas shipped via Ukraine reaches Europe again.

The gas is likely to be delivered only to Europe, not Ukraine itself, since Moscow and Kiev have yet to agree a price for the gas, subsidised since Soviet times. Russia has repeatedly said Ukraine must now pay the going market rate.

Russian President Dmitry Medvedev said Ukraine must pay a "normal, balanced, European price" for gas, without discounts.

He said last year Russia sold gas to Ukraine for $179.5 per thousand cubic metres, but Ukrainian consumers paid $320.

"That profit margin went into the pockets of unknown structures, which most likely represent someone's corrupt interests," he said.




Tags: European Union | finalise | gas monitoring deal |

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