EU mission to Moscow and Kiev over gas dispute

(BRUSSELS) - The EU commission said Thursday it would send a fact-finding mission to Moscow and Kiev to shed light on their gas payment dispute after a previous row disrupted European supplies.

European Commission President Jose Manuel Barroso "has asked a team of senior officials at the commission to travel to Moscow and Kiev," his spokesman told reporters.

The aim of the mission is "to establish all the facts about the situation."

Talks will also be held in the EU with gas operators, he said.

Barroso sent a letter to the Czech Prime Minister Jan Fischer, whose country holds the EU's rotating presidency, asking for time during a summit with EU leaders on June 18-19 to discuss the mission's findings.

Russian Prime Minister Vladimir Putin warned Wednesday that gas supplies to Europe piped through Ukraine could come to a grinding halt soon due to crisis-ridden Kiev's payment arrears.

Moscow has called in recent days on the European Union to help Ukraine pay for its gas, or face a repeat of a crisis in January when Russia turned off the natural gas taps for two weeks, hitting supplies in Europe.

A representative of the Ukrainian presidency said Thursday that the government was in talks, notably with Russian banks, to secure credits to pay for Russian gas delivered in May, with payment due on Sunday.

Ukraine's public energy group Naftogaz "is in a difficult financial situation, which has forced it to negotiate with all possible partners, including Russian banks," said Bodgan Sokolovski, an energy specialist with the Ukrainian presidency.

He declined to identify the banks and the other potential partners.

"Naftogaz has put together only 20 percent of the amount needed to cover the gas delivered in May," he said. Russia supplied Ukraine with 2.3 billion cubic meters of gas last month for 620 million dollars (437 million euros), he added.

Sokolovksi said that in past months the needed funds had been found about 36 hours ahead of the deadline.

"Therefore it's possible that between now and Friday the rest of the money will arrive," he said, meaning that Ukraine would not have to apply for new credits.

In his letter to Fischer Barroso said Putin had told him Ukraine needed five billion dollars to buy additional gas from Gazprom, the Russian state-run gas giant, to fill its storage facilities before next winter, money that Kiev does not have.

He said in his letter that Putin "wants the EU to help Russia put together a loan package for Ukraine for this purpose."

"I think we would all be conscious that another gas crisis would have serious implications not just for our neighbours, but for the European Union and its member states," Barroso added.

The EU relies on Russia for almost a quarter of all the gas it consumes, notably for heating and the power industry, and more than 80 percent of the supplies transit Ukraine.

"I ... want to avoid rushing to judgement on what actions the EU should take. So I am asking a senior team of commission officials to go both to Moscow and Kiev to ascertain -- as far as possible -- the facts," Barroso said.