Russia, EU Sign Energy Agreement

Russia and the European Union signed a deal Saturday on the deployment of EU observers to monitor the flow of natural gas across Ukraine, clearing the way for restarting Russian gas supplies to a freezing Europe.

Russia said it wants the written deal in place before resuming shipments, but it also needs to be signed by Ukraine to come into force. Saturday's signing followed Russian Prime Minister Vladimir Putin's talks with visiting Czech Prime Minister Mirek Topolanek, whose country holds the rotating European Union presidency.

Topolanek, who talked to Putin after visiting Ukraine, was returning to the Ukrainian capital later Saturday to get Ukraine's approval.

He voiced hope for quickly finalizing the deal. "I feel optimistic about my yesterday's talks in Ukraine," Topolanek said. "I believe there will be no obstacles for its signing in Ukraine."

The EU experts arrived in Ukraine on Friday prepared to act as referees in a bitter economic battle between the two former Soviet states, but there were no gas shipments for them to track Saturday as Russian and Ukrainian officials argued over details of the monitoring pact.

Russia — which supplies about one-quarter of the EU's natural gas, most of it shipped through Ukraine — says the EU monitors are needed to prevent what it described as Ukraine's theft of supplies meant for Europe, a charge Kiev hotly denies.

Monitors, including representatives of the European Commission, European energy companies and Russia and Ukraine gas officials, will travel to gas pumping stations on Ukraine's eastern and western borders to track the gas flow.

"Once the monitoring mechanism starts working, we will start gas supplies," Putin said after the talks with Topolanek at Novo-Obaryovo, a government estate just outside Moscow. "But if we see them stealing it again and part of the gas is missing, we will again reduce supplies by that amount."

The Russian natural gas giant Gazprom halted the shipment of gas intended for Ukraine Jan. 1 after negotiations over a new gas contract broke down.

Russia then accused Ukraine of siphoning its gas intended for Europe, and finally turned off the taps on all gas shipped through Ukraine on Wednesday, ending or reducing gas supplies to more than a dozen European nations as winter turned bitterly cold across the region.

A commercial dispute over gas transit and prices triggered the current crisis, but relations between the two ex-Soviet neighbors deteriorated after the 2004 Orange Revolution in Ukraine led to the election of a pro-Western government in Kiev. Russia has been keen to restore its clout in the former Soviet sphere.

Ukrainian officials have voiced concern that the deal proposed by Russia would give Russian officials too much access to the Ukrainian gas transit system, but Russia insisted it only wants to make transit fully transparent.

EU governments have criticized both Russia and Ukraine for the crisis, saying it was unacceptable to see homes unheated, businesses closed and schools shut down during winter because of the commercial squabble.

"It has gone so far now that it's not an issue who is to blame for that," Topolanek told Putin.

Russia in the past has sold gas to Ukraine and some other former Soviet neighbors at prices significantly lower than those it charges Europe.

Russian President Dmitry Medvedev said Friday that Ukraine should pay a European price for the Russian gas. Last year, Russia charged Ukraine $179.50 per 1,000 cubic meters, about half what it charged its European customers.

Gazprom is currently demanding $450 per 1,000 cubic meters, a price that could hit Ukraine's consumers and heavy industry hard at a time when the country is suffering a sharp economic downturn.

The disruption of Russian gas supplies comes during a harsh winter. At least 11 people have frozen to death this week in Europe, including 10 in Poland, where temperatures have sunk to minus 13 F (minus 25 C).

Fifteen countries — Austria, Bulgaria, Bosnia, Croatia, the Czech Republic, France, Greece, Hungary, Italy, Macedonia, Romania, Serbia, Slovakia, Slovenia and Turkey — said their Russian supplies ceased Wednesday. Germany and Poland also reported substantial drops in supplies.

Ukraine said it would supply Bulgaria, where thousands of homes are without heating and factories have been shut, with 2 million cubic meters of gas daily beginning Saturday. Bulgaria's average daily consumption before the crisis was some 8 million cubic meters. Ukraine said it also will ship 1.5 million cubic meters of gas a day to neighboring Moldova.
By Associated Press Writer Nataliya Vasilyeva; AP writers Maria Danilova and Yuras Karmanau in Kiev, Douglas Birch and Vladimir Isachenkov in Moscow contributed to this report