Kyiv, Moscow trade accusations

Russia and Ukraine traded accusations on Wednesday after nearly five hours of talks in Brussels failed to reach an agreement.

"As of this point in time, we have only one mechanism of solving this situation - I need to take all of this to the Stockholm arbitration court," Ukrainian Energy Minister Yuriy Prodan told reporters.

Russia has offered a $100 (74 euro) discount on its current gas price of $485 per 1,000 cubic meters. President Vladimir Putin on Wednesday warned Ukraine not to turn down his country's reduced offer.

"If our offer is rejected then we will shift to a whole other level," Putin told a government meeting in Moscow. "That is not our choice and we do not want that."

Discount disagreement

Prodan insisted that Ukraine wouldn't accept a discount, and instead wanted a contract over a price of no more than $268.50 (198.44 euros), which it says is closer to European market norms.

"We would like this contract to have very clear mechanisms without influence of this government or another government," he said. "Unfortunately Russia proposed a way of fixing the price which I would call political."

The Russian president hit out at Kyiv for demanding further price cuts.

"The reduction is too little for our Ukrainian partners; they want more, although it's not clear on what basis," Putin said. "If this is the case, then it seems that the issue is being driven into a dead end."

Despite the harsh words from both sides, EU Energy Commission Günther Oettinger, who is brokering the negotiations, said Wednesday's meetings had made some headway.

"We are still in negotiations," he said. "I can see movement on both sides and both sides will need to continue to improve."

Political dispute

The latest round of talks had started on a positive note after Russian gas giant Gazprom announced it was pushing back by five days its deadline for Ukraine to start paying for its gas upfront, or risk a cut in its supply.

Putin also held a phone call with German Chancellor Angela Merkel in which he said he'd ordered the Russian negotiating contingent to take "a constructive position" in order to come to a "mutually acceptable agreement."

Russia says Ukraine owes $4.5 billion (3.3 billion euros) in outstanding gas bills. Kyiv has refused to pay in protest to Moscow nearly doubling its price after pro-Kremlin President Viktor Yanukovych was ousted in February.

The European Union has an interest in resolving the dispute. Russia supplies about a third of the EU's gas, with about half of that reaching the bloc through pipelines across Ukraine.

dr/jr (AFP, dpa, Reuters, AP)