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Russia sets stage for gas crisis summit

RUSSIAN President Dmitry Medvedev will host an international summit today in a bid to end the gas row between Moscow and Kiev, which has left hundreds of thousands of Europeans without heating in the depths of winter for more than a week.

Medvedev proposed holding the summit of importers of Russian gas in Europe on Wednesday after meeting with the prime ministers of Slovakia, Moldova and Bulgaria, countries most affected by supply shortfalls.

While the plan for three-way talks was broadly supported, the choice of Moscow as a summit venue was opposed by Ukraine and some eastern European countries.

The Kremlin announced on Thursday that a summit on the gas dispute would be held in Moscow today and invitations were sent to heads of state and governments of European countries that consume and transit Russian gas.

The European Commission later confirmed that EU Energy Commissioner Andris Piebalgs and Czech Energy Minister Martin Riman, whose country holds the rotating EU presidency, were ready to join the summit.

EU spokesman Johannes Laitenberger said yesterday that today's talks "are the last and best chance" to resolve the dispute. If they are unsuccessful, the EU will have to look at ties with Kiev and Moscow "and assess in each case whether we can continue with business as usual," he said.

But the Russian initiative has only received a lukewarm response from European nations, with the French foreign ministry saying on Thursday that "conditions are not ripe" for a fully fledged summit on the crisis.

During a phone conversation on Thursday, Medvedev personally invited his Ukrainian counterpart Viktor Yushchenko, who had said earlier that he would not go to Moscow and suggested the summit beheld in Brussels or Prague.

The Ukrainian president threw Russia's summit plans into disarray by meeting yesterday with European leaders in Kiev to discuss the gas crisis. Yushchenko's talks with his Slovak counterpart, the prime minister of Moldova and the Polish foreign minister is certain to irritate Russia.

It remains unclear whether Yushchenko will participate in the summit. There is speculation that Ukrainian Prime Minister Yulia Tymoshenko would attend as she will be in Moscow for talks with her Russian counterpart Vladimir Putin.

Russia cut off gas supplies via Ukraine to Europe on Jan. 7, one week after it halted supplies to Ukraine over a pricing dispute.

Russian gas giant Gazprom reopened its taps to Europe on Tuesday morning under a three-way agreement signed by the EU, Ukraine and Russia, but no gas reached Europe.

Russia accused Ukraine of blocking the gas flow, while Ukraine argued that Russia's choice of the gas route was technically "unacceptable."

Ukraine's presidential energy envoy Bohdan Sokolovsky said on Thursday that Kiev will not resume gas transit to Europe unless an agreement is signed with Moscow on who would cover the cost of the so-called "technical gas."

Medvedev suggested to Yushchenko on Thursday that Russia transfer technical gas to Ukraine on behalf of a EU consortium to resume deliveries to Europe.

Also on Thursday, Putin proposed that the EU set up a consortium to purchase from Russia the gas needed to restore supplies when meeting with the head of Italian energy company ENI.

The Ukrainian gas company Naftogaz said it would like to discuss this proposal, which was described as constructive by the ENI chief.

Nevertheless, Ukraine and Russia are still bickering over a gas supply contract for 2009.

Gazprom originally asked Ukraine for US$250 per 1,000cubic meters, but it is now demanding a "market price" of US$450, which Ukraine said was unacceptable.

Sokolovsky said a reasonable price in the first quarter of 2009should vary from US$192.6 with a transit rate of US$2.2 per 1,000 cubic meters per 100 kms to US$218 with a transit rate of US$2.47.

However, Gazprom insists its contract with Ukraine sets the transit fee at US$1.6 and it cannot be changed until 2013.

Putin, who is on a visit to Germany, is to discuss the dispute with German Chancellor Angela Merkel, who said Thursday Russia was risking its reputation as a creditable gas supplier due to the interruption of its gas exports to Europe.

Another topic on the agenda will probably be the Nord Stream pipeline project, which would carry Russian gas directly to Germany through the Baltic Sea, bypassing Ukraine and other former Soviet republics.

Merkel might also remind Putin that EU countries do have long-term supply contracts with Russia although they do not have agreements with Ukraine, so gas shipments must be restored no matter how much it may cost.


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