Russia, European Commission Make Headway on Ukraine Gas Supplies

Russia and the European Commission have made progress towards ensuring stable gas supplies to Ukraine and via that country to the European Union this winter, the EU executive said on Friday.

Russia accounts for about a third of Europe's gas needs, with Ukraine a key transit route. Moscow and Kiev have had a number of gas pricing rows in the past which have led to a disruption in supplies to the EU.

The European Commission said it held "constructive" talks on the issue with Russia's Energy Minister Alexander Novak and Gazprom Chief Executive Alexei Miller on Friday.

"The meeting...focused on the actions needed to ensure stable gas supplies to Ukraine and via Ukraine to the EU during winter," the Commission said after the meeting in Vienna.

The next step would be a trilateral meeting with Russia and Ukraine and to finalise a new package "in the near future", it said in a statement.

Novak, however, told reporters a deal had been reached.

"In our opinion, we managed to reach an agreement on a winter package," he said after the meeting.

Moscow and Kiev agreed last year on a winter package for supplies with a price discount of $100 per thousand cubic metres and advance payments. That agreement expired on July 1 and has yet to be replaced.

Dealings between the two countries have been complicated by a conflict between Ukrainian government troops and separatists in Ukraine's east. Moscow denies Ukrainian and Western charges that its troops are directly supporting the separatists.

Novak was quoted by agency Interfax as saying on Friday Russia was ready to give Ukraine a price discount similar to the one it gives neighbouring countries, such as Poland. He did not specify the discount.

Miller also said the EU might provide Kiev with $500 million for gas purchases of about 2 billion cubic metres (bcm) and that the trilateral meeting could take place next week. The commission did not confirm the figure.

Ukraine draws on gas in underground storage to safeguard supply in winter and ensure there are no disruptions to the transit of Russian gas across the country to EU clients.

It had built up 14.9 billion cubic metres (bcm) of gas in underground storage as of Sept. 11 and wants to store 18-19 bcm for winter by mid-October.

In Kiev, Andriy Kobolev, head of Ukrainian state energy firm Naftogaz, said on Friday the country hoped to sign a new gas agreement this month.

(Reporting by Shadia Nasralla in Vienna and Katya Golubkova in Moscow; editing by Susan Thomas)