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Ukraine backs off from EU-backed Russia gas deal

War-torn Ukraine today distanced itself from an EU-brokered agreement with Russia that would have restored its gas supplies during winter and helped rebuild trust between the neighbouring foes.

AFP| Updated: Sep 28, 2014, 00:54 AM IST

Kiev: War-torn Ukraine today distanced itself from an EU-brokered agreement with Russia that would have restored its gas supplies during winter and helped rebuild trust between the neighbouring foes.

The European Union's energy commissioner emerged from hours of acrimonious negotiations in Berlin yesterday to pronounce the three-month dispute on the verge of being resolved.

"We have developed a workable design for a winter package," Guenther Oettinger said.

Both he and Russia's energy minister added that a final agreement could be signed after consultations in Moscow and Kiev next week.

A compromise would not only save the Westward leaning nation from adopting drastic energy savings measures in freezing weather but also make sure that Russian gas flowed uninterrupted to European homes.

Yet the meeting came with trust between all sides lacking and any remaining goodwill between Moscow and Kiev dependent on the fate of a fragile truce in a pro-Russian uprising that has claimed more than 3,200 lives.

Ukraine's top energy officials vowed today to keep fighting over both the gas price and Moscow's claim that Kiev owed it billions of dollars in debt.

"No final decision was adopted. Not a single document was signed -- period," Naftogaz state energy firm chief Andriy Kobolev wrote in a Facebook post.

The deal's interpretations in Moscow and Kiev diverged on almost every point that led to the original freeze of Russian deliveries in June.

Oettinger said the compromise would see Russia ship at least 5.0 billion cubic metres of gas to Ukraine over a six month period in exchange for an early payment of USD 3.1 billion (2.4 billion euros).

The volume roughly covers the amount of gas Ukraine says it needs to make it safely through the winter.

That translates into a price of USD 385 per 1,000 cubic metres, 20 per cent less than the figure Russia began charging Ukraine in the wake of the February ouster in Kiev of an unpopular Kremlin-backed president.

But Russia said the USD 3.1 billion would be used to cover a USD 5.3-billion debt Ukraine had incurred since last year due to both its financial problems and refusal to pay the higher rate.