Ukraine says progress made on gas deal with Russia

Ukrainian President Petro Poroshenko said progress had been made during talks here today aimed at resolving a dispute over gas supplies from Russia that also threatened deliveries to Europe.

AFP| Last Updated: Oct 17, 2014, 22:39 PM IST

Milan: Ukrainian President Petro Poroshenko said progress had been made during talks here today aimed at resolving a dispute over gas supplies from Russia that also threatened deliveries to Europe.

"We have some progress on the gas issue," Poroshenko said, adding that the "basic parameters" of a new contract with Russia had been agreed while further discussion on how to finance it was required.

French President Francois Hollande said after meeting Poroshenko and Russian President Vladimir Putin that an accord on the gas issue was "within reach."

Hollande added that the two former Soviet states had also agreed to accelerate prisoner exchanges agreed under a ceasefire accord last month.

The EU-brokered talks here followed a warning by Russian President Vladimir Putin that "major transit risks" could lead to a disruption of the flow of Russian gas to western Europe this winter.

Russian output accounts for around one third of the region's consumption and previous disruptions, in 2006 and 2009, led to sharp spikes in prices. Half the Russian gas coming to Europe transits via pipelines through Ukraine.

European Union energy commissioner Guenter Oettinger is due in Kiev on Monday ahead of three-way EU-Russia-Ukraine talks on the gas issue in Brussels the following day.

The EU is sufficiently concerned about the prospect of a winter energy shortfall to have conducted "stress tests" to show how the 28-nation bloc would cope with a disruption to supplies from Russia.

A proposal that has been under discussion for some time would see cash-strapped Kiev settle USD 3.1 billion of unpaid bills with Russian state gas giant Gazprom, with two billion dollars paid before the end of October, in exchange for a resumption of supplies.

The stress tests revealed that the EU could cope with a six-month suspension of Russia supplies thanks to stocks being currently at a high level.