June 15, 2014 / 9:44 AM / 4 years ago

Ukraine, Russia hold last-ditch gas talks before deadline

KIEV (Reuters) - Ukraine and Russia made a last-ditch attempt to reach a deal in a gas pricing dispute on Sunday, hours before a deadline for Kiev to pay a $1.95 billion debt or have its gas supplies cut off.

Gazprom Chief Executive Officer Alexei Miller (C) arrives to take part in talks with members of the Ukrainian delegation and European Union Energy Commissioner Guenther Oettinger in Kiev June 14, 2014. REUTERS/Valentyn Ogirenko

Sources close to the talks in Kiev said no breakthrough was made in the initial stages of the talks on Sunday evening but the sides continued talking after a pause.

Russia and Ukraine disagree how much Kiev should pay for the natural gas it receives from Russia and Russian state-owned natural gas producer Gazprom plans to switch to an advance payment system if Kiev does not start paying its bills.

The deadline is 0600 GMT on Monday, after which Russia has threatened to halt supplies to Ukraine.

This could disrupt the gas flow to the European Union, which gets some of its imports via Ukraine, but prospects of a breakthrough have been hit by political tensions and clashes between government forces and pro-Russian separatists in east Ukraine.

The talks, which are being mediated by the European Commission, had been expected to resume on Sunday morning following a meeting on Saturday, but were delayed. The reason was not immediately clear.

A source close to one of the delegations said there had been a break in the discussions, by which time no “results” had been achieved. Another source close to the talks said there had been “nothing so far.”

Ukraine has accepted a European Commission compromise proposal of $326 per 1,000 cubic metres of gas for an interim period. Moscow has offered Kiev a $100 reduction to $385, around the average amount paid by Russia’s European clients.

Resolving the dispute and averting supply cuts could help ease tension over the separatist rising in east Ukraine, which Kiev blames on Moscow despite Russian denials that it is arming the rebellion.

Tensions are also high following Russia’s annexation of Crimea after Ukraine’s Moscow-leaning president was ousted and pro-Western leaders took over power.

Editing by Timothy Heritage

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