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EU official: Proposed solution found in Ukraine-Russia natural gas dispute, more talks planned

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BERLIN - A proposed solution to a dispute over Ukrainian natural gas debts to Moscow would see Ukraine's gas company pay $2 billion to Russia's Gazprom this week and trigger talks on the price Kyiv should pay for future deliveries as it tries to avert a supply cutoff, a top European Union official said Monday.

EU Energy Commissioner Guenther Oettinger said after meeting the Russian and Ukrainian energy ministers in Berlin that both sides must still consult with their political leaders and the gas companies involved, and they have until Wednesday evening to approve the deal. He stressed "we are not done" but said he is optimistic of an agreement.

The proposal calls for Ukraine's Naftogaz to make an initial $2 billion payment to Gazprom on Thursday to settle part of Kyiv's outstanding bills for gas delivered between November and March. Doing so would send "a clear signal of creditworthiness," Oettinger said.

If the payment is made, Russia would be prepared to hold EU-brokered talks in Berlin on Friday with Ukraine on the price of gas delivered in April, May and in the future, Oettinger told reporters. Naftogaz would make a second payment of $500 million to Gazprom on June 7. And Gazprom would agree to continue supplying gas for June without insisting on prepayment, according to the European Commission.

Ukrainian energy minister Yuri Prodan was more guarded on the likelihood of a deal but didn't rule one out.

"So far there is not yet a decision taken, and I also assume that from the Russian party no decision has been taken yet," he said. "It was a suggestion by the European Commission to be discussed."

Russia says Ukraine's total gas debt is $3.5 billion. It has said that it would only deliver gas to its economically struggling neighbour in June if it pays in advance. The prospect of a possible cutoff has worried European countries that receive Russian gas piped through Ukraine.

Ukraine has said it could start paying off the debt if Moscow restores gas price discounts cancelled following the ouster of pro-Russian President Viktor Yanukovych. He fled to Russia in February after months of protests, triggered by his decision to dump a pact with the EU in favour of closer ties with Moscow.

Gazprom has scrapped a discount granted to Yanukovych in December and then another rebate linked to a 2010 deal on Russian navy presence in Ukraine's Crimea, which Moscow annexed in March. Canceling the discounts raised the price by 80 per cent, which has caused Ukrainian debt to swell.

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