Ukraine, Russia set for gas talks in Kiev

[June 14, 2014]  KIEV (Reuters) - Ukrainian and Russian delegations prepared for gas pricing talks in Kiev expected later on Saturday in an attempt to avert possible supply cuts to Ukraine and interruption of onward flows to Europe - two days before a payment deadline.

A spokesman for Russia's top natural gas producer Gazprom said it was preparing to resume talks with Ukraine. A Ukrainian government source said that delegations from Russia and the European Commission were due in Kiev on Saturday."We are ready to seek compromise, but it is useless to put pressure on us," Gazprom's spokesman Sergei Kupriyanov said.

Gazprom has said that Ukraine should pay $1.95 billion, a part of its debt for Russian gas supplies, by Monday, June 16, or face a prepayment regime and possible gas supply cuts. The move could disrupt supplies to the European Union where Russia meets a third of gas needs.

Around a half of Russian gas exports to Europe goes via pipelines in Ukraine.

The Ukrainian government source said: "The arrival of the representatives of the European Commission is already confirmed and now we are waiting for confirmation from the Russian side."

The EU's energy commissioner, Guenther Oettinger, has been mediating the talks.

Gazprom's Kupriyanov said the meeting in Kiev would be held in "a new format, different from the previous consultations". He declined to elaborate.

Ukrainian Energy Minister Yuri Prodan proposed on Friday starting a new round of talks in Kiev or, failing that, in another European city.

Russia initially demanded at the talks that Ukraine should pay $485 per 1,000 cubic metres of gas but then offered to remove the export duty, a move that would cut the price to $385 - around the average amount paid by Russia's European clients.

Ukraine had held out for $268.5 until Friday, when it said it was ready to pay $326 for an interim period of 18 months while a long-term price was worked out.

Russian energy authorities said last week that the price of $385 was final and the Ukrainian government has told the energy sector to prepare for Russian gas cuts from Monday.

(Reporting by Pavel Polityuk, editing by Timothy Heritage and William Hardy)

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