Friday May 29, 08:34 PM
EU to mull Russia-Ukraine gas row but not pay bill: Barroso
BRUSSELS (AFP) - Faced with a new gas payment crisis between Russia and Ukraine, European Commission chief Jose Manuel Barroso vowed Friday to raise the issue with EU leaders, as pressure increased from Moscow.
For days Moscow has called on the European Union to help Ukraine pay for its gas, as Kiev faces the menace of Russia turning off the gas taps as it did for two weeks in January, hitting supplies in Europe.
Barroso said he had received a letter from Russian Prime Minister Vladimir Putin, which according to Moscow contains a proposal for the EU to create a credit pool for Ukraine.
He added that the two men also had a long telephone conversation on Friday.
"Prime Minister Putin called me to tell me about the difficulties he anticipates in payments coming from Ukraine (and) to say that Ukraine has asked for some support for financing of these payments," Barroso told reporters.
"I promised Mr. Putin I would raise the issue with the heads of states and government," when they meet in Brussels on June 18-19 to "see what is possible to do."
However Barroso warned that it was "difficult, if not impossible" to help out Ukraine, suffering badly from the global economic crisis, given the current state of the EU budget.
The EU relies on Russia for almost a quarter of all the gas it consumes, notably for heating and powering industry, and more than 80 percent of the supplies transit Ukraine.
In a statement published on his website Friday, Putin reiterated calls for the EU to help out, saying Ukraine's problems in paying its bills for Russian gas have created a "exceptionally serious" situation.
"The problem surrounding the transit in Ukraine is very serious and doesn't just involve Russia and Ukraine," he said.
Kiev had to settle its bill for the gas intended for its own consumption and for the gas destined for stocking in underground reservoirs ahead of the colder months, before June 7, he added.
Putin also described as unacceptable a request by Ukrainian Prime Minister Yulia Tymoshenko that Moscow pay for its gas to transit Ukraine over the next seven years in the form of an advanced payment worth around five billion dollars (3.5 billion euros).
"We are relying on the fact that our fears will be heard and studied in the most serious way possible during the European Summit on June 18 and 19," Putin said.
Russian gas giant Gazprom had also called on the EU to help Ukraine.
According to Putin's deputy, Igor Sechin, the letter to Barroso proposed that the EU create a pool of credit to help Ukraine meet its gas payments.
"If our suggestion is accepted and if Europe is interested in providing credit to Ukraine for this purpose, Russia will look at the possibility of its participation," he said in televised remarks.
Last week, President Dmitry Medvedev said he doubted Ukraine's ability to pay four billion dollars for 19.5 billion cubic metres of gas that Kiev needs to replenish its reservoirs in time for winter.
Medvedev said a syndicated loan agreement should be reached, with European and Russian participation, but with the EU providing most of the money.
"We have doubts about Ukraine's ability to pay," he said at the time. Ukraine's state gas company has however insisted that there is no problem with the payments.
Ukraine has been one of the countries worst-hit by the financial crisis and its energy company Naftogaz -- which on Thursday denied it was in trouble -- has sharply reduced purchases of gas from Russia as a result.
Russia claims that Naftogaz does not have enough funds for the purchase of gas needed for its clients' summer orders and its reserves are depleted.
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