EU Seeks to Close Russian Gas Monitoring Deal

The European Union sought to finalize details on Friday of a gas monitoring deal to allow the resumption of gas supplies to Europe via Ukraine, which have been cut off for days over a pricing row.

But the Czech EU presidency was downbeat about prospects for an agreement on Friday, dimming hopes of an early resolution of the nine-day crisis which has cut supplies to thousands of homes in the Balkans and businesses in the depths of a cold winter.

"We will only be starting at 1800 (4 pm London time) so it is already quite late. It is highly possible that we have to say today that not everything is finalized," Martin Riman, the Czech industry and trade minister, told reporters.

He arrived in Ukraine with Czech Prime Minister Mirek Topolanek to try to thrash out a deal on the fine print of a deal on supervising gas flows from Russia.

Topolanek was expected to fly on to Moscow on Saturday for talks with Vladimir Putin, a spokesman for the Russian prime minister said.

The presence of monitoring missions along the transit routes for Russian gas will reassure Moscow that the gas it pumps across Ukraine is not being siphoned off by Kiev.

Moscow cited this allegation -- denied by Ukraine -- as its reason for shutting off gas through its ex-Soviet neighbor earlier this week.

The EU gets a quarter of its gas supplies from Russia, 80 percent of which pass through Ukraine.

So far, supplies to 18 countries have been disrupted by the dispute.

Alexei Miller, head of Russia's state-controlled gas monopoly Gazprom, said Ukraine had given verbal agreement for deployment of the monitors.

"As soon as the document has been signed... and observers are ready for practical work on the gas stations, transit of gas via Ukraine will be possible," he said in a statement.

The European Commission said a team of 20 observers, including experts from major gas companies and senior officials from the EU, had already arrived in Ukraine and begun work.

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Naftogaz and Gazprom traded accusations on Friday that their own monitors were being refused access by the other side.

Even once the monitors are in place, it could take days before Russian gas shipped via Ukraine reaches Europe again.

The gas is likely to be delivered only to Europe, not Ukraine itself, since Moscow and Kiev have yet to agree a price for the gas, subsidized since Soviet times.

Russia has repeatedly said Ukraine must now pay the going market rate.

Russian President Dmitry Medvedev said Ukraine must pay a "normal, balanced, European price" for gas, without discounts.

He said last year Russia sold gas to Ukraine for $179.5 per thousand cubic meters, but Ukrainian consumers paid $320.

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"That profit margin went into the pockets of unknown structures, which most likely represent someone's corrupt interests," he said in remarks broadcast on Vesti-24 television.

The damaging shutdown in Russian supplies has revived calls within the European Union to find other suppliers, although real diversification cannot happen quickly as alternative pipelines do not yet have enough gas to fill them.

Hungary's Energy Minister Csaba Molnar, whose country depends on Russia for 70 percent of its gas needs, said the EU must get financially involved in the Nabucco pipeline which aims to transport Caspian gas into central Europe.

Eastern and central Europe have borne the brunt of the dispute, with many countries forced to seek gas from elsewhere or draw on their storage reserves.

The Czech Republic said on Friday it would provide about 4 million cubic metres of gas per day to its neighbor Slovakia, which declared a state of emergency over its gas supplies.

Bulgaria's state gas monopoly Bulgargaz has completely cut gas flows to 72 big industrial consumers and sharply lowered deliveries to another 153 due to limited domestic reserves.

The dispute between Kiev and its former Soviet master follows tensions over Ukraine's efforts to join NATO, a move bitterly opposed by Moscow and viewed with wariness even by European members of the alliance and by investors.

Ukraine has been beset for months by political squabbling between President Viktor Yushchenko and his former ally, Prime Minister Yulia Tymoshenko, notably over ties with Russia.

Russia cut off gas for Ukraine's domestic consumption on Jan. 1 in a row over pricing and debts.

Officials from both sides met EU officials in Brussels on Thursday where the 27-nation bloc sought an end to the spat.

Copyright 2009 Reuters. Click for restrictions.