Ukraine To Pay Gas Arrears If It Gets Contract First

Ukraine is prepared to pay arrears to Russia for gas once it has a contract with Moscow and will take the country to court if it refuses to sign, Ukrainian Prime Minister Arseny Yatseniuk was quoted as saying by a German newspaper on Saturday.

Ukraine told Russia on Friday a $786 million partial payment on a bill that Russia says could exceed $5 billion by next week was on its way to Moscow. That averted an immediate threat that Russia would stop supplying the former Soviet republic with gas if it fails to make advance payments.

In an interview with Germany's Frankfurter Allgemeine Zeitung, Yatseniuk said Ukraine's only demand was to get a "fair contract" and gas should not be used as a "political weapon".

Ukraine insists on a price of $268.50 per 1,000 cubic metres while Russia stands by its demand for $485. The average gas price paid by European customers to state-run Gazprom is around $370.

"We would like a comprehensive market-oriented approach in Ukrainian-Russian gas relations. We're prepared to pay our arrears but first we must sign a contract," Yatseniuk said.

"If not, we'll take the case to court," he said, adding that this would be the best option if Moscow refused to come to an agreement.

He gave no further details on the law suit threat but said Russia had confiscated Ukrainian property, including gas, in Crimea, resulting inUkraine losing billions of dollars.

In a separate interview with German newspaper Die Welt, Ukrainian gas oligarch Dmytro Firtash said he would advise Yatseniuk to tell Russian President Vladimir Putin that Ukraine would pay its gas debts if Moscowreturned Crimea.

"We're not against paying but our territory was taken away from us. If you were to take my apartment should I continue to pay for electricity and gas?" Firtash was quoted as saying.

European Energy Commissioner Guenther Oettinger, who acted as a mediator during talks between Ukraine and Russia in Berlin, said both sides had agreed to continue talks on Monday in Brussels as long as the $786 million payment arrives in Gazprom's account on Monday morning as planned.

Oettinger said he was optimistic the energy dispute between Ukraineand Russia would be resolved next week, according to an advance copy of an article due to be published in Frankfurter Allgemeine Sonntagszeitung on Sunday.

"I think there's a good chance that we'll get normal supply relationships," he was quoted as saying, adding that major progress had been made on Friday and all sides had shown a willingness to come to an agreement.

Russia was prepared to negotiate a "fair market price," he said.

(Reporting by Michelle Martin; Editing by Lynne O'Donnell)