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Russia Rejects Ukraine Gas Proposal, Talks Stall

Russian Prime Minister Vladimir Putin meets with Ukrainian Prime Minister Yulia Tymoshchenko in Astana on May 22.
ASTANA (Reuters) -- Russia has rejected a Ukrainian proposal to defer payment on up to $5 billion in gas storage payments as energy talks between the prime ministers of the ex-Soviet neighbors ended in stalemate.

Russian Prime Minister Vladimir Putin dismissed the proposal by his Ukrainian counterpart, Yulia Tymoshenko, for Kyiv to buy gas for its storage facilities in exchange for future transit fees that Moscow would pay to deliver gas via Ukraine.

"The volumes are large. The timeframe for what would essentially be a loan is also large," Putin told reporters after the meeting. "We will not work under such conditions and with such big risks."

He added: "Russia is ready to do its part in resolving this question, but only its part."

President Dmitry Medvedev, attending an EU-Russia summit in the far eastern city of Khabarovsk earlier on May 22, challenged European leaders to help Ukraine pay its gas bills and help avert a new gas crisis.

The stalled negotiations also come a day after a Russian government source said Kyiv and Moscow were on the verge of another gas crisis, a possible repeat of the dispute that left millions of Europeans without heating in the dead of winter this year.

'Find A Compromise'

Tymoshenko told reporters no decision had been reached, but expressed hope that a resolution would be found.

"I believe that we will find a compromise," she said after talks in the Kazakh capital, Astana, which was hosting a meeting of CIS prime ministers.

Russia, which supplies a quarter of Europe's gas, much of it via Ukraine, has twice cut supplies in recent years due to pricing disputes amid icy political relations between Moscow and Kyiv.

Russian gas export monopoly Gazprom says it wants to store extra gas in Ukraine during winter to be able to respond more quickly to the needs of its customers in Europe.

How these storage facilities will be filled, and who will pay to fill them, have become the main sticking point in the most recent gas talks between the former Soviet allies.

Putin estimated the required volume of gas to be kept in storage in Ukraine would reach 15 billion cubic meters this year. This is in addition to gas taken out for Ukraine's domestic use.