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Russia, Ukraine PMs To Meet For Gas Dispute Talks


Prime Minister Yulia Tymoshenko's office said she'd agreed to the meeting.

Prime Minister Yulia Tymoshenko's office said she'd agreed to the meeting.

MOSCOW/KYIV (Reuters) -- The Russian and Ukrainian prime ministers will meet this weekend to try to resolve a gas row that has cut back supplies to a freezing Europe.

German Chancellor Angela Merkel reiterated European calls for a quick end to the two countries' arguments over gas debts and prices, saying trust in Russia was at risk.

Russian Prime Minister Vladimir Putin's spokesman said Putin would meet his Ukrainian counterpart Yulia Tymoshenko on January 17, soon after returning from talks with Merkel in Berlin, which are scheduled for January 16.

An EU-brokered deal had been supposed to get supplies of Russian gas moving to Europe via Ukraine on January 13 despite the pricing impasse, with international monitors in place to ensure Ukraine was not siphoning off gas, as Moscow has alleged.

But it failed to break the deadlock and the row continues to disrupt supplies to 18 countries, forcing factories to shut down and leaving householders shivering in bitter winter cold.

I think there is a risk that confidence in Russia could be lost in the long run.
EU monitors said no gas was flowing from Russia to Europe via Ukraine at all on January 15.

"I think there is a risk that confidence in Russia could be lost in the long run," Merkel told a news conference in Berlin with British Prime Minister Gordon Brown.

It was another sign of growing frustration within the EU at the failure of Russia and its former Soviet vassal Ukraine to resolve the row over how much Kyiv should pay Moscow for gas or even to allow gas to flow to Europe while they argue it out.

The International Energy Agency said Russia had lost its status as a reliable gas supplier to Europe.

EU Cool On Gas Summit

Russian President Dmitry Medvedev has proposed holding a summit in Moscow this weekend with European importers of Russian gas to find a way out of the crisis.

The EU showed little enthusiasm for the idea.

A Moscow envoy of the Czech Republic, the EU Presidency, said Europe was a better place for a meeting and the EU's executive arm said it should not serve as an excuse for delays in resuming the transit of Russian gas to Europe via Ukraine.

Brussels is concerned the summit could be a Russian attempt to divide the bloc, which has so far been relatively unified in its line in the dispute.

Moscow has accused Ukraine of deliberately cutting gas to Europe while Kyiv says Moscow is trying to use the wrong routes and to deny it gas to maintain pressure in the pipelines.

The European Union imports one-fifth of its gas from Russia via Ukraine. The crisis has highlighted its vulnerability to disruption and sparked a new debate about diversifying supplies.

The row takes place against a backdrop of strained political ties between Moscow and Kyiv. Russia is angered by the ambition of Ukraine's leaders to join the NATO alliance, and by their support of Tbilisi during the Russian-Georgian war in August.

Paolo Scaroni, CEO of Italy's ENI -- one of dozens of energy firms worried by the supply disruptions and anxious for a quick resolution -- was to meet with officials of Russia's Gazprom gas export monopoly in Moscow on January 15.

Gazprom said it had again asked Ukraine to transit some 99 million cubic meters of gas to Europe on January 15, as it did on the previous two days. It said Kyiv again denied access.

Ukraine has countered by saying Russia is deliberately seeking to ship gas through Ukraine via a route that is being used to send Ukrainian reserves of gas the other way -- to the east of the country.

Sharp Rise In Prices


Gazprom has been using routes through other countries to raise exports to Europe but its total supplies are still half the usual export volumes in winter months.

Ukraine itself has yet to agree on prices for its own supplies. Moscow is seeking a sharp rise despite a drop in global prices amid a severe downturn in Ukraine's economy.

Tymoshenko told Putin Ukraine would guarantee transit if Moscow allowed Kyiv to use 8 percent of supplies for technical needs. Kyiv would pay later when prices for 2009 are agreed, she said. Moscow has repeatedly turned down similar requests.

European Commission chief Jose Manuel Barroso said the EU could advise its firms to sue Russian and Ukrainian firm if gas supplies were not restored.

"With both sides hardening their positions, European leaders calling for lawsuits, and financial damage accumulating daily, the costs are starting to reach meaningful levels," said Ron Smith, head of research at Alfa Bank.

The dispute has already cost Gazprom $1.2 billion and Smith said the losses were widening by $120 million every day -- half of which was destined to go into Russia's strained budget.
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