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War or peace? Tanks roll as Russia, Ukraine edge toward gas deal

An armored vehicle belonging to pro-Russian separatists, destroyed in Friday's battle for control of the port city of Mariupol.An armored vehicle belonging to pro-Russian separatists, destroyed in Friday's battle for control of the port city of Mariupol.
An armored vehicle belonging to pro-Russian separatists, destroyed in Friday's battle for control of the port city of Mariupol.Anadolu Agency--Getty Images

Ukraine and Russia edged closer to a deal that could stop Russia carrying out its threat to cut off natural gas supplies to the country from Monday.

News agencies Interfax and Reuters reported Andriy Kobolev, the head of Ukrainian gas company Naftogaz Ukrainy, as saying it was ready to pay a price of $326 per thousand cubic meters for Russian gas the next 18 months as an interim arrangement.

If the offer is accepted by Russian gas monopoly OAO Gazprom, that could buy time for the two sides to settle a dispute over how much Ukraine owes for gas it took in the past, and lower the risk of the west imposing fresh sanctions on Russia.

Gazprom couldn’t immediately be reached for comment. It has said it wants Naftogaz to pay it $1.9 billion by Monday to settle past debts. Failing that, it says Naftogaz will have to pay in advance for all future supplies, at a price of $485 per thousand cubic meters.

The Russian government (which controls Gazprom) has offered to cut that price by $100 by cancelling export duty on it. As such, the two sides are effectively now less than $60 apart, having started the week nearly $220 apart.

Ukraine’s new offer is about 10% below the average price that EU customers paid Gazprom last year and is well above the subsidised priced of $268.50 that it got as long as President Viktor Yanukovych was in power.  Russia changed its position after Yanukovych was overthrown by protesters opposed to his plans to take Ukraine back into Russia’s economic orbit.

Russian President Vladimir Putin has said settling the gas dispute would be a first step to normalizing relations with Ukraine. But fighting in the east of the country between government forces and pro-Russian rebels is making a return to normal look less and less likely.

Ukrainian Interior Minister Arsen Avakov complained Thursday that three Russian tanks had crossed into Ukraine, illustrating the army’s inability to stop Russian volunteers and equipment from joining rebels who still control the regions of Luhansk and Donetsk.

However, government troops did reconquer the key port city of Mariupol Friday after a six-hour operation that killed three separatists and wounded 17, Avakov said on his Facebook page. Mariupol is the gateway to world markets for Ukraine’s biggest export, steel.

Russian news agencies also reported heavy fighting breaking out around Luhansk airport on Friday. Government troops have been using both artillery and airstrikes against the rebels in the two provinces, and the UN High Commission for Refugees says at least 10,000 people had fled as of last week.

Russian media cited residents trying to leave the besieged town of Slavyansk Friday as saying that they had been turned back by Ukrainian checkpoints, despite an order from the new president Petro Poroshenko to set up a safe evacuation corridor for refugees.