EU seeks new Ukraine-Russia gas deal by June

(BRUSSELS) - The EU has set June as a target to clinch a new deal for Russia to supply gas to Ukraine through the following winter and secure supplies to Europe, an EU official said Thursday on the eve of three-way talks in Brussels.

The talks on Friday involving the Ukrainian and Russian energy ministers as well as the EU energy commissioner will not so much seal an agreement as set the agenda for talks, the official said.

"Don't expect spectacular results," the official with the European Commission, the EU's executive arm, told reporters.

"We should try and get an agreement not later than June," said the official.

With a temporary deal expiring at the end of March, Ukraine can ensure its gas supplies in the intervening months through reverse flows from EU states Slovakia, Poland and Hungary.

"If we take all these reverse flows together... we can contribute to a large extent to the replenishment of the stores," the official said.

But officials added Russian gas imports will be needed to replenish reserves to the level of 20 billion cubic metres, the quantity needed to secure both supplies for Ukraine and the transit of gas to EU countries through next winter.

Fifteen percent of Europe's gas transits Ukraine.

The storage level is expected to decline from 7.8 billion cubic metres to 6.5 bcm by the end of the current winter heating season in mid-April, they added.

The EU hopes the deal it will end up brokering with Russian Energy Minister Alexander Novak and his Ukrainian counterpart Volodymyr Demchyshyn will last through the autumn of 2016.

That is the date, the official said, when an international arbitration panel in Stockholm is due to rule on a dispute between the two sides which erupted after the Ukraine crisis.

After a pro-Russian leadership was ousted in Kiev and was replaced by a pro-Western one, Russia decided to increase the price of gas sold to Ukraine.

Moscow then halted deliveries in June when Kiev refused to pay the increase, but they resumed late last year when the EU brokered a deal to ensure supplies through the winter.

The deal risked coming apart when Moscow threatened at the end of February to halt deliveries to Ukraine and divert stocks instead to the eastern parts of the country controlled by pro-Kremlin separatists after Kiev cut them off.

But the dispute was resolved in an agreement on March 2 that was brokered by Maros Sefcovic, European Commission Vice-President for Energy Union, who will attend Friday's talks.