Fate Of Ukraine-Russia Gas Talks Unclear As Deadline Looms

Ukraine and Russia failed to hold expected talks on a gas pricing dispute on Sunday morning, despite a deadline for Kiev to pay a $1.95 billion debt by Monday or have its gas supplies cut off.

Ukraine's Energy Ministry said it hoped the talks, being mediated by the European Union's energy  commissioner, would resume later on Sunday but both sides said a time had not been agreed.

Halting deliveries to Kiev could disrupt the gas flow to the EU, which receives gas via Ukraine, but prospects for a breakthrough have been hit by armed clashes between government forces and pro-Russian separatists in east Ukraine.

Ukrainian and Russian officials failed to end the long-running dispute at talks in Kiev on Saturday but Ukrainian Energy Minister Yuri Prodan said after leaving the meeting that the discussions would continue on Sunday morning.

A spokesman for Russian natural gas producer Gazprom later said: "No time has been set for new talks."

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

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.

(Reporting by Natalia Zinets and Pavel Polityuk, Editing by Timothy Heritage)