January 17, 2009 / 10:09 AM / 10 years ago

Russia's Putin admits damage from Ukraine gas row

DRESDEN, Germany, Jan 17 (Reuters) - Russian Prime Minister Vladimir Putin admitted on Saturday Russia was suffering political damage from a gas row with Ukraine and insisted that Moscow had done everything to avert the crisis.

Putin spared no effort to present Moscow as an honest player forced to deal with an unpredictable partner, in a two-hour conversation with journalists, including editors of leading German newspapers, in a Dresden hotel.

“You ask me what to do about the political damage,” Putin told the editors, who questioned him about the row which has severed Russian gas supplies to Europe though Ukraine since Jan. 7. “There is damage, but what can we do?”

Russia, which has thorny relations with Ukraine, stopped supplying gas to the pro-Western ex-Soviet republic on Jan. 1 after talks on gas prices for 2009 yielded no result.

On Jan. 7, Russia halted supplies to Europe through Ukraine, saying Kiev was not letting the gas through. Eighteen European states have been affected by the cut-off in the depths of winter. Slovakia and the Balkan states have been hit most severely.

The row has angered the European Union and led to increasing doubts about the reliability of Russia as an energy supplier.

Putin, who during his visit to Germany was negotiating a solution to the gas row with Chancellor Angela Merkel and heads of European energy companies, said Russia was not to blame and demanded that Ukrainian gas pipes be put under tight control.

In a clear bid to win the sympathy of frustrated Europeans, Putin said he personally, as well as Russia’s state gas giant Gazprom (GAZP.MM), had offered lucrative deals to Ukraine during earlier negotiations to end the crisis.

Putin said Gazprom first offered Ukraine a price of $250 per 1,000 cubic metres of gas, a much lower rate than the over $400 paid by most European states.

When it was rejected, another offer of $285 with the right to re-export gas to Europe was made. Re-export of Russian gas has been a major source of Ukrainian revenues for years.

“I told Ukrainian Prime Minister (Yulia) Tymoshenko: come and sign a deal for $250 with the right of re-export...” Putin said. “She rejected it.”

OPTIONS

Putin was speaking in Dresden hours before Tymoshenko and European officials were expected in Moscow for a new attempt to break the deadlock.

Ukraine says it needs hundreds of thousands of cubic metres of gas to fill the empty pipelines, restore pressure and restart the export gas flow.

Putin has proposed that a consortium of European companies could buy the so-called “technical gas” for Ukraine. He said he discussed in Berlin with officials from Eni, E.ON and Gaz de France Suez how to prevent export gas from being “stolen” by Ukraine.

Putin also said international experts should examine the Ukrainian pipeline system to decide what the best routes were to deliver gas to Europe.

But he also said Europe should cooperate with Russia in building new pipelines from Russia to the West bypassing ex-Soviet transit states.

“I mean North Stream and South Stream,” he said, referring to Russian-proposed pipelines under the Baltic and the Black Sea. “We need to make it so that the transit country no longer feels like a monopolist.” (Editing by Janet Lawrence)

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