Ukraine-Russia gas talks fail ahead of cutoff deadline

Protesters gather near the Russian embassy in Kiev on June 14, 2014. -- PHOTO: REUTERS
Protesters gather near the Russian embassy in Kiev on June 14, 2014. -- PHOTO: REUTERS

KIEV (AFP) - Ukraine failed to reach a breakthrough with Moscow in talks to avert a Russian gas cut on Monday that would hit Europe and add further urgency to the worst East-West crisis since the Cold War.

A Ukrainian source close to the negotiations said the EU-brokered meeting ended "without a result" nor any agreement about when the sides might meet again.

Russian officials issued no immediate comment about the negotiations.

It was not immediately clear if the gas cut would go ahead as threatened on Monday.

The third "gas war" between Russia and Ukraine since 2006 flared when Moscow nearly doubled its rates in the wake of a deadly winter uprising that pulled Kiev out of the Kremlin's historic orbit.

Ukraine receives half its gas supplies from Russia and transports 15 percent of the fuel consumed in Europe - a reality that prompted EU Energy Commissioner Guenther Oettinger to try to urgently broker a long-term solution to the dispute.

Kiev said heading into the negotiations that it was ready to make a US$1.95 billion (S$2.43 billion) payment demanded by Moscow if Russia agreed to cut its ongoing price to US$326 from US$485.50 for 1,000 cubic metres of gas.

But Russian President Vladimir Putin says US$385 per 1,000 cubic metres was his final offer and threatened to turn off Ukraine's taps if no payment was made by early Monday.

The gas negotiations were further clouded by a new diplomatic feud that exploded after Ukraine's acting foreign minister called Putin "a prick" while trying to restrain protesters who attacked Moscow's embassy compound in Kiev on Saturday.

Nationalists with signs reading "Kremlin - hands off Ukraine!" tore down the embassy's Russian tricolour while others smashed its windows with boulders and overturned diplomats' cars.

Ukraine's new leaders and their Western allies accuse Russia of supplying rocket launchers and even tanks to the insurgents in a bid to break up its western neighbour following the February ouster of a pro-Kremlin regime.

"They wanted to see blood spilt," Russian Foreign Minister Sergei Lavrov claimed on Sunday.

NATO released satellite images purporting to show three Russian tanks that had crossed the border and were later spotted being raced across the eastern city of Donetsk by militants flying the flag of their self-declared "People's Republic".

But Moscow has hit back by accusing Western powers of backing dangerous Ukrainian "fascists" who are oppressing the east's ethnic Russians and waging a "punitive operation".

The embassy protest came in response to the deaths of 49 servicemen killed Saturday when pro-Kremlin rebels downed their military transport plane with weapons Kiev believes were supplied by Moscow.

The loss of life was the biggest suffered by Ukrainian forces in their escalating two-month push to reclaim control of separatist areas of the industrial east.