Ukraine backs off from EU-backed Russia gas deal

The deal would have restored its gas supplies during winter and helped rebuild trust between the neighbouring foes

KIEV: War-torn Ukraine on Saturday distanced itself from an EU-brokered agreement with Russia that would have restored its gas supplies during winter and helped rebuild trust between the neighbouring foes.

The European Union's energy commissioner emerged from hours of acrimonious negotiations in Berlin on Friday to pronounce the three month dispute on the verge of being resolved.

"We have developed a workable design for a winter package," Guenther Oettinger said.

Both he and Russia's energy minister added that a final agreement could be signed after consultations in Moscow and Kiev next week.

A compromise would not only save the westward leaning nation from adopting drastic energy savings measures in freezing weather but also make sure that Russian gas flowed uninterrupted to European homes.

Yet the meeting came with trust between all sides lacking and any remaining good will between Moscow and Kiev dependent on the fate of a fragile truce in a pro-Russian uprising that has claimed more than 3,200 lives.

And Ukraine's top energy officials vowed on Saturday to keep fighting over both the gas price and Moscow's claim that Kiev owed it billions of dollars in debt.

"No final decision was adopted. Not a single document was signed - period," Naftogaz state energy firm chief Andriy Kobolev wrote in a Facebook post.

The deal's interpretations in Moscow and Kiev diverged on almost every point that led to the original freeze of Russian deliveries in June.

Oettinger said the compromise would see Russia ship at least 5.0 billion cubic metres of gas to Ukraine over a six month period in exchange for an early payment of $3.1 billion.

The volume roughly covers the amount of gas Ukraine says it needs to make it safely though the winter.

That translates into a price rate of $385 per 1,000 cubic metres - 20 percent less than the figure Russia began charging Ukraine in the wake of the February ouster in in Kiev of an unpopular Kremlin-backed president.

But Russia said the $3.1 billion would be used to cover a $5.3-billion debt Ukraine had incurred since last year due to both its financial problems and refusal to pay the higher rate.

It added that the $385 figure was only a temporary discount due to expire in the spring.

Ukraine disputed both points and Oettinger himself shed little light on which side was right.

"There are still lots of disagreements," Ukranian Energy Minister Yuriy Prodan told AFP by telephone shortly after the Berlin talks broke up.

Prodan called the $3.1 billion a direct payment for the upcoming deliveries and stressed that no specific date or sum for the first transfer had been set.

Yet Moscow insisted that Ukraine had admitted owing vast sums to Russia's state-held gas giant Gazprom that it would partially pay off before the end of the year.

Naftogaz and Gazprom have filed mutual claims over the entire dispute with a Stockholm arbitration tribunal.

The Ukrainian pipelines accounts for about 15 percent of all gas imported by Europe.

But EU powers such as Italy - reliant on the Ukrainian link for all their Russian supplies - fear that Kiev may be forced to tap into those flows once the winter heating season begins.

The seeming failure to achieve meaningful progress came with Moscow-Kiev relations dependent on the fate of a tenuous peace pact that was unveiled in stages since early September but whose terms remain under dispute.

Russian and Ukrainian defence officials did take a cautious step on Friday toward establishing a 30-kilometre buffer zone along the front line that made sure the five-month war did not resume.

The Ukrainian defence ministry said that both guerrillas and government forces would begin "a gradual withdrawal of forces" if no truce violations were recorded in the two days.

A Kiev military spokesperson said one Ukrainian soldier had been killed since Friday morning.

It was unclear if the loss came before or after the Friday evening defence talks.