Gas Talks Falter as Ukraine Mourns 49 Killed in Attack
Negotiators in Kyiv will attempt to
revive talks to avert a Russian gas shutoff tomorrow as Ukraine
observes a day of mourning for 49 people killed in the country’s
worst military loss in the months-long conflict.
Russia, Ukraine and the European Union may resume talks
this evening, Ukrainian Energy Minister Yuri Prodan told
reporters today before holding consultations with the EU.
Ukraine hasn’t changed its position in talks with Russia, which
could turn off fuel supplies tomorrow at 10 a.m. Moscow time
without a deal.
The showdown over fuel heaps pressure on Ukraine’s new
president, Petro Poroshenko, who’s struggling to fulfill an
election pledge to halt an uprising by rebels in the country’s
eastern regions. Russia and Ukraine are trading accusations over
yesterday’s attack on a military plane near Luhansk and an
attack on the Russian Embassy in Kyiv, damaging the prospects
for a breakthrough in the gas talks.
“I’m not optimistic about the talks at all,” Dmytro Marunich, co-chairman of the Energy Strategies Fund research
institute, said today by telephone from Kyiv. “In the best case
scenario, the sides will agree on temporary terms of cooperation
between Naftogaz and Gazprom with some guarantees on stable
transit to the EU while the case is heard in Stockholm
arbitration.”
Mourning Attack
Poroshenko declared a day of mourning in a statement
yesterday, vowing to punish the people behind the “terrorist”
attack. U.K. Foreign Secretary William Hague condemned the
downing of the plane, saying it “underlines once again the
urgency and importance of Russia taking further measures to
prevent the escalation of violence.”
The incident came after the U.S. State Department said
Russia sent heavy weapons, including old-model tanks and rocket
launchers, to the rebels, who say they are fighting a war
against fascism and to join Russia.
Ukraine has intensified an offensive against the insurgents
since it battled a rebel convoy of armored vehicles two days
ago, including the first reported separatist tanks. NATO warned
that reports of an armored column entering from Russia would
mark a “serious escalation” in the conflict.
Protesters gathered near the Russian Embassy in Kyiv
yesterday, demanding Russia stop sponsoring the rebels.
Demonstrators threw firecrackers and eggs, broke some of the
building’s windows with stones, and turned over and torched at
least three embassy cars.
Putin Call
German Chancellor Angela Merkel, French President Francois Hollande and Russian President Vladimir Putin discussed the
crisis and gas supplies before the talks started yesterday,
according to presidential offices in Paris and Moscow. Russian
Foreign Minister Sergei Lavrov followed up with his German and
French counterparts in phone calls today, the ministry said on
its website.
EU Energy Commissioner Guenther Oettinger is attempting to
broker a deal in Kyiv after talks in Brussels last week led to
Russia pushing back its deadline from June 10. The EU is
dependent on Russian gas piped through Ukraine for about 15
percent of its supplies.
Ukrainian Prime Minister Arseniy Yatsenyuk instructed
authorities on June 13 to prepare for a gas cutoff once OAO
Gazprom’s debt payment deadline tomorrow expires. By then,
Ukraine must pay $1.95 billion to partially cover its debt for
past supplies, according to Gazprom.
Gas Price
Ukraine refused to pay after Russia raised the price of the
fuel by 81 percent in April. Putin stripped the country of a
2010 export-duty break that it exchanged for a lease on its
Black Sea Fleet’s port in Crimea, which Russia annexed in March.
Gazprom rescinded a price discount granted to Ukraine in
December, citing mounting debt.
The gas conflict reflects the broader political crisis
between two former Soviet partners as Russia took Crimea after
Ukraine’s Kremlin-backed president was ousted in street protests
in February. Ukraine, along with the U.S and the EU, accuses
Russia of stoking turmoil in Ukraine by supporting pro-Russian
separatists, including supplying them with weapons.
Russia has denied providing such support, while urging
Ukraine’s new government to do more to protect the rights of
Russian speakers in the country.
Three separatists were killed and two others captured when
they tried to break through a checkpoint near Slovyansk in
eastern Ukraine, the country’s National Guard said in a website
statement. That follows the death of five border guards
yesterday in an attack on a convoy near the coastal town of
Mariupol.
Ukraine’s hryvnia, this year’s worst-performing currency
against the dollar with a 30 percent plunge, fell 0.2 percent
last week in Kyiv, data compiled by Bloomberg showed. The ruble
was little changed.
To contact the reporters on this story:
Daryna Krasnolutska in Kyiv at
dkrasnolutsk@bloomberg.net;
Volodymyr Verbyany in Kyiv at
vverbyany1@bloomberg.net;
Ewa Krukowska in Brussels at
ekrukowska@bloomberg.net
To contact the editors responsible for this story:
Balazs Penz at
bpenz@bloomberg.net;
Andrew J. Barden at
barden@bloomberg.net
Scott Rose, Andrew J. Barden