'Last chance' gas talks yield no results so far

Russian President Dmitry Medvedev said he was 'hopeful' of a breakthrough in Moscow talks on the gas crisis, but stressed that recent diplomatic efforts had 'yielded no results'. Earlier, Russian PM Putin canceled talks with his Ukranian counterpart.


REUTERS - Russian President Dmitry Medvedev said on Saturday there were "still no results" from efforts to end a dispute crippling gas supplies to eastern Europe but pledged that talks would go on.

"Unfortunately, and I would like to underline this, all the efforts have so far yielded no results," Medvedev said as he opened a Kremlin meeting of nations affected by the dispute.

The lack of gas has closed factories and left hundreds of thousands shivering in the winter across eastern Europe. It has also raised questions about Russia's reliability as an energy supplier and Kiev's fitness as a partner for the EU.

After the Kremlin meeting, Medvedev reiterated Moscow's position on the issue at the heart of the dispute, saying that Kiev had to pay European-level prices for gas supplies, more than double what it now pays.

"There is nothing damaging about that. It's the money our other partners pay and Ukraine is in a position to pay it," Medvedev told a news conference.

Russia cut off supplies to Ukraine on Jan. 1 because it would not pay the higher prices. Six days later export flows to eastern Europe through Ukraine ceased amid Russian accusations that Kiev was "stealing" gas intended for export.

Kiev says it cannot afford such high prices and wants Russia to pay higher transit fees for gas it exports through Ukraine.

Earlier in the day, Russian Prime Minister Vladimir Putin did not hold planned negotiations on the crisis with his Ukrainian counterpart, Yulia Tymoshenko.

There was no official explanation but a source close to the Russian side said it appeared Tymoshenko lacked the necessary mandate to discuss a solution and had come to Moscow "empty-handed".

Tymoshenko clashed with her domestic political rival, President Viktor Yushchenko, on the eve of her trip to Moscow about tactics for solving the dispute.

In Kiev, a source in Yushchenko's office said there were no divergences in position between the president and the prime minister, who had complete authority to negotiate.

"The prime minister has a full mandate at the talks. Otherwise, she would not be taking part in them," the source said.

Putin's chief spokesman, Dmitry Peskov, said Putin and Tymoshenko would continue negotiations on Saturday night after dining at the Kremlin.

Russian gas giant Gazprom said it was determined to reach an agreement on Saturday and would make every effort to do so.

Russia invited heads of government of all countries buying or transporting its gas to its "Moscow International Conference on Ensuring Delivery of Russian Gas Supplies" on Saturday but most stayed away.

The Czech presidency of the European Union had urged member states not to attend, so that Brussels could speak with one voice for them. In the event, Slovakia was the only EU member to come, apart from the Czechs. Most of the other attendees were Russia's allies in the Balkans and eastern Europe.

Putin had said on Friday after talks in Germany that Moscow was nearing a deal to restart gas deliveries to European customers.

A key hurdle to ending the dispute appeared to have been overcome when a consortium of European gas companies said they had agreed to supply enough gas to fill the empty pipeline and restore pressure so that exports could resume.

But the key sticking point in the row -- the price Ukraine must pay for its own supplies this year -- remains unsolved.

European supplies

The row has angered the European Union, which gets about a fifth of its gas from pipelines that cross Ukraine, and left many countries in eastern and southern Europe with no supplies in the depths of winter.

A spokesman for European Union Energy Commissioner Andris Piebalgs, who attended the Moscow summit, described the discussions as "constructive".

"The commission is encouraged by these discussions, which will continue," he said. "Hopefully we will have results and those results cannot be different than the immediate resumption of gas flows to Europe."

Gazprom says Ukraine should pay European-level prices of $450 per 1,000 cubic metres (tcm) of gas for 2009, up from $179.5 per tcm in 2008. But Ukraine, heading into its worst recession for a decade, has said it can afford only $201.

Tymoshenko, a former gas trader, said on Friday there should be no intermediaries in the gas trade between Russia and Ukraine and ruled out any sell-off of Ukraine's pipelines. She also demanded that Ukraine speak with one voice in the negotiations.

The row has focused minds in Europe about the need to find new routes for gas but experts say any solution would take years to build and Gazprom says EU dependency on Russian gas is forecast to increase over coming years.

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