Russia, Ukraine, EU to hold further gas talks in April

Russia, Ukraine and the European Commission will hold a new round of gas supply talks next month after an initial round in Brussels on Friday ended without a deal.

AFP| Last Updated: Mar 21, 2015, 03:07 AM IST

Brussels/Moscow: Russia, Ukraine and the European Commission will hold a new round of gas supply talks next month after an initial round in Brussels on Friday ended without a deal.

The talks had not been expected to yield major progress, with EU officials setting a target date of June for a new accord on how much Ukraine should pay Moscow for its gas.

Speaking after several hours of talks in Brussels, Russian Energy Minister Alexander Novak said Russia would be willing to consider a discount, but a take-or-pay clause that requires Kiev to buy a certain amount of gas whether it needs it or not would re-apply from April 1.

The Commission, the EU executive, brokered an accord in October to keep gas flowing over the peak demand winter months despite tension between Kiev, Moscow and Brussels over Russia`s annexation of Crimea.

Under that deal, Ukraine pays $329 per 1,000 cubic metres (tcm) for gas in the first quarter and Novak had said the price will increase to $348 per tcm after expiry of the "winter package" on March 31.

Ukrainian Energy and Coal Minister Vladimir Demchishin said he expected a gas price of $250 per tcm for the second quarter, according to Interfax news agency.

The European Commission in a statement said the talks had been constructive and confirmed comment from Ukraine and Russia that a further round of talks was expected in April.

A price rise would run counter to falling market prices linked to cheaper oil, but Novak told reporters it was "a preliminary figure" and did not rule out a discount.

In addition to ensuring supplies for Ukraine, the Commission also wants to avoid any impact on European Union gas supplies that are piped from Russia via Ukraine.

In televised comments, Novak said Ukraine had promised to guarantee transit and in turn, Russia would consider cutting export duty.

"The discount could be provided by a government decision for the second quarter. We agreed to consider this issue each quarter taking into consideration volatile prices on the market," Novak said.

Even after the winter deal expires, Ukraine can buy cheaper gas through reverse flows from the European Union, but that would not be enough to fill up storage adequately over the summer months.

The Commission has estimated Ukraine would need 4-6 bcm from Russia to fill up storage by around October when demand rises.

It also calculates that Ukraine needs to boost its reserves to 19-20 billion cubic metres (bcm) by around October from about 7.3 bcm now.