Putin seeks quick end to gas row

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European energy firms are today working on a plan to break the deadlock between Russia and Ukraine and restore gas supplies to Europe in mid-winter.

Paolo Scaroni, chief executive of Italian energy giant Eni SpA said late last night a consortium would provide gas necessary for technical reasons to get pipelines and pumping stations working again.

The move could allow gas supplies to Europe to get under way immediately, leaving the question of reimbursement for the consortium's gas on hold until an agreement between Ukraine and Russia on their price dispute is reached.

Scaroni said the consortium would include E.ON, Gaz de France Suez and an Austrian company.

Meanwhile, earlier today Russian Prime Minister Vladimir Putin said he believed a deal was possible "reasonably fast" on a consortium of European gas firms which could provide gas to Ukraine and get pipelines to Europe working again.

"We propose to share risks and create something like a consortium, invest money in it and supply the technical gas. I think this can be done reasonably fast," Putin said at the start of a meeting with European gas firms in Berlin.

Eni is Europe's leading gas operator and largest user of the Ukraine pipeline. Scaroni, who said the involvement of the firms would begin on Friday, discussed the consortium idea with Russian Prime Minister Vladimir Putin yesterday.

Scaroni flies on Friday to Germany where Putin was to hold talks with Chancellor Angela Merkel, who says Russia is at risk of hurting its reputation as a reliable energy supplier.

An official of Russia's Gazprom, who gave details of Scaroni's trip, said the European consortium would deal with organisational issues on Friday and was not likely at once to buy the gas needed for pumping to start.

Scaroni would meet Russian and German officials, the official said, but a Berlin government spokesman said ENI would not be present at the talks between Merkel and Putin.

Putin and Ukrainian Prime Minister Yulia Tymoshenko plan to meet in Moscow on Saturday to try to resolve the gas row, which has cut supplies to 18 states in the depths of winter, forcing many factories to close and leaving householders shivering.

There was little enthusiasm in Brussels for a separate Moscow meeting with importers proposed by Russian President Dmitry Medvedev. But the EU executive said it and the Czechs -- current holders of the EU presidency -- would attend if Russian and Ukrainian leaders were there too.

Senior east European officials will hold talks in Kiev on Friday on the disruption in gas supplies, the office of Ukrainian President Viktor Yushchenko said.

Frustration is growing in the EU at the failure of Russia and its former Soviet vassal Ukraine to resolve the row over how much Kiev should pay Moscow for gas, or at least allow gas to flow to Europe while they argue it out.

"It is clear today, even if they turn on the taps tonight and gas starts to flow, there has been irreparable, irreversible damage done, a loss of confidence in both Russia and Ukraine," said Martin Riman, Czech industry and trade minister.

An EU-brokered deal was supposed to get supplies of Russian gas moving to Europe via Ukraine on Tuesday despite the pricing dispute. EU monitors are in place to ensure Ukraine does not siphon off gas, as Moscow has alleged it has done.


Brussels is concerned the meeting proposed by Medvedev in Moscow could be an attempt to divide the bloc, which has so far been relatively united on the issue.

The European Union imports a quarter of its gas from Russia and 80 percent of its supplies go via Ukraine. The crisis has highlighted its vulnerability to disruption and sparked a new debate about diversifying supplies.

Slovakia said on Thursday it would have to reduce supplies even to heating plants and cut off big industrial users unless Russian gas started flowing via Ukraine again by February.

The row takes place against a backdrop of strained political ties between Moscow and Kiev. Russia is angered by the ambition of Ukraine's leaders to join the NATO alliance, and by their support of Tbilisi during the Russian-Georgian war in August.

Ukraine's Yushchenko held talks with Prime Minister Gordon Brown in London on Thursday. Brown stressed the need for an "urgent resolution" of the gas problem, a spokesman said.

Moscow is seeking a sharp rise in the prices Ukraine pays for its own gas supplies. Ukraine is reeling from a severe economic downturn, with output in the key steel sector falling 43 percent in December compared with December 2007.