Gas flow to resume when observers in place, says Russia's Gazprom

A Bosnian worker cuts wood by the roadside at the northern entrance to Sarajevo on Wednesday after deliveries of Russian natural gas were stopped on Tuesday evening. Bosnian officials say over 72,000 Sarajevo households have been left without heating in sub-zero temperatures.(Hidajet Delic/Associated Press)

Russian gas company Gazprom says it will resume pumping natural gas to Europe as soon as international gas observers are allowed to monitor the flow through Ukrainian pipelines.

Gazprom chief Alexei Miller made the comments in Brussels Thursday following a surprise early-morning meeting with his Ukrainian counterpart in Moscow.

After the impromptu morning talks between Miller and Naftogaz's Oleh Dubina ended without resolution, the two men travelled to Brussels for a planned meeting with European Union officials.

Naftogaz spokesman Valentyn Zemlyansky said it's possible they could later return to Moscow to continue discussions.

Oleh Dubina of Ukraine's Naftogaz said his company will ship Russian gas to Europe on the condition "that Russia restores supplies and provides technical gas for Ukraine's gas transport system."

Thursday marked the second day natural gas supplies from Russia to Europe, transported through pipelines in Ukraine, were shut off, leaving tens of thousands of people in a dozen European countries without heat as a cold snap settles in across parts of the region.

The dispute between the two countries, which stems from a disagreement over outstanding payments and natural gas prices, has hit the Balkan countries particularly hard.

"Is this the 21st century? How can someone leave me without heating in minus 10 degrees because of a dispute I have nothing to do with?" asked Snjezana Kordic, 51, from her home in downtown Sarajevo, the Bosnian capital.

Bosnia, which has no gas reserves, imports all its gas from Russia through Ukraine, Hungary and Serbia. Gas deliveries have been halted since Tuesday night, leaving approximately 240,000 people without heat.

In Bulgaria, the EU's poorest member, 92 per cent of the country's gas supplies come from Russia via Ukraine with no links to alternative gas routes. The heating crisis prompted dozens of school closures on Thursday.

Officials at a zoo in the country's capital, Sofia, said they've run out of fuel to warm the enclosures of about 1,300 animals. The zoo is using electric heaters to keep its elephants, monkeys, parrots, rhinos and hippos warm in the sub-zero temperatures.

"Only the Siberian tigers feel comfortable in these temperatures," said zoo director Ivan Ivanov.

Quick resolution needed: Barroso

EU Commission President Jose Manuel Barroso has implored the prime ministers of Russia and Ukraine to help bring about a quick resolution to the dispute.

"If this matter is not solved, it will raise very serious doubts about the reliability of Russia as a supplier of gas to Europe and Ukraine as a transit country," he said Wednesday.

Barroso said both countries have agreed to accept international monitors that could verify the flow of gas, which could meet one of Russia's conditions for resuming gas supplies. Russia has accused Ukraine of siphoning off gas meant for European customers.

Kiev denies allegations it is stealing gas, saying Russia is to blame for the disruption because it refuses to supply the gas needed to run its pipelines, including the compressor stations that pump gas west.

Each side says the other is responsible for supplying the gas to run the pipeline network, but there is no way to sort out the conflicting claims because details of the transit contract are secret.

In the last round of negotiations between Russia and Ukraine, Gazprom said it wanted to charge Ukraine as much as $450 per 1,000 cubic metres in January, up from its offer before the cut-off of $250, which Kiev turned down.

Russia charged Ukraine $179.50 per 1,000 cubic metres last year, about half what it charged its European customers.

Russian President Dmitry Medvedv said late Wednesday the government will insist Ukraine pay European prices "without a discount," and settle its $600-million debt to Gazprom.

Ukraine has said if it pays more for natural gas, Russia should pay more for shipping gas across its territory. It wants the debt issue settled through court arbitration.

Europe relies on Russia for a quarter of its natural gas, and 80 per cent of it goes through pipelines that cross Ukraine.

With files from the Associated Press