(Reuters) - Russia and Ukraine made "significant progress" in talks on gas supplies at a meeting between Presidents Dmitry Medvedev and Viktor Yanukovych late on Sept. 24, Yanukovych's office said on Sept. 25.
Ukraine says it is paying too much under a current gas supply deal and wants to change the terms. Previous disputes between the two have disrupted gas supplies to Europe.
Russia has said it could only review the deal if Ukraine joined its customs union with Belarus and Kazakhstan, a move that would rule out a free trade deal between Ukraine and the European Union that Kyiv wants to agree this year.
Yanukovych visited Russia on Sept. 24, hoping to reach a compromise with Medvedev and his powerful Prime Minister Vladimir Putin.
On Sept. 25, Yanukovych’s office quoted him as saying that "significant progress was made during the talks which gives us hope that concrete results will be achieved soon in the interest of both nations."
Yanukovych’s office said he and Medvedev agreed to hold a meeting of a bilateral inter-government commission in Ukraine in October. It provided no other details.
Citing Ukraine’s energy and coal ministry, Interfax news agency reported on Sept. 25 that Ukraine’s Energy Minister Yuri Boyko and Alexei Miller, the head of Russian gas giant Gazprom had separate talks on Sept. 25.
The two discussed ways of implementing agreements reached by Medvedev and Yanukovych, it said.
Ukraine’s economy relies heavily on energy produced from natural gas. In 2009, Kyiv agreed to import no less than 33 billion cubic metres of gas per year from Russia at a price linked to world oil and oil product prices.
In the fourth quarter of this year, the bill is expected to approach $400 per thousand cubic metres, a level Kyiv says is unreasonably high.
Ukraine cannot save by importing less gas either, since the contract has a "take-or-pay" provision, obliging it to stick to the agreed volume of imports.
Its main leverage comes from the fact that Ukraine is also the main transit route for Europe-bound Russian gas, although Russia is trying to diversify exports and has launched the new Nord Stream pipeline bypassing Ukraine.
The current deal was agreed in early 2009, after a bitter price row which halted Gazprom’s European supplies for weeks.
