A man walks outside a residential block of flats which was damaged by a recent shelling in Donetsk, eastern Ukraine, October 19, 2014 (Photo: Reuters)
Ukraine and Russia stood on the verge on Sunday of resolving their latest gas war in time to keep the war-scarred nation and EU clients warm through the winter months.
Ukrainian President Petro Poroshenko said he and Russian counterpart Vladimir Putin had reached a price deal at high-stakes talks in Milan on Friday that otherwise focused on the six-month pro-Kremlin revolt convulsing the ex-Soviet state's separatist east.
Two meetings mediated by German Chancellor Angela Merkel and French President Francois Hollande -- as well as a brief exchange on their own -- marked the two leaders' most in-depth dialogue since Poroshenko's May election.
The tense day broke up without Putin meeting EU hopes that he would denounce the separatist leadership election that pro-Russian militants intend to stage on November 2, a week after parliamentary polls in Ukraine.
But Poroshenko said the meetings produced the broad outlines of a deal that could see Russia halt the gas supply cutoff it began in June -- its third in less than 10 years.
Kiev had branded the cut a form of "economic aggression" aimed at punishing the new pro-Western leaders for their February ouster of a Kremlin-backed president and a decision to sign a landmark EU trade and political association pact.
Poroshenko told the nation late Saturday that he had made sure in Milan that their homes would stay warm through the bitter winter season -- a crucial promise to make ahead of next Sunday's crunch general election.
"Ukraine will have gas. Ukraine will have heat," Poroshenko said in a pre-recorded television interview.
He said a more detailed protocol agreement due to be completed by Tuesday will see Ukraine meet Russia's demand and pay $385 per 1,000 cubic metres of gas for deliveries guaranteed through the end of March.
Poroshenko said he and the two European leaders had pressed Russia to lower that rate to $325 per 1,000 cubic metres for summer months when energy demand drops.
"The Russian side insists on $385 for the whole year," said Poroshenko.
The chief spokesman for Russia's state-held gas giant Gazprom confirmed that the two sides had found an interim price solution.
But he added that Ukraine still disputed the amount of money it owed Moscow for unpaid deliveries and that no formal agreement had yet been reached.
A new deal's signing "depends on other factors -- including the payment of debts," spokesman Sergei Kuprianov told AFP.
"These will be discussed in Brussels on Tuesday."
Ukraine Prime Minister Arseniy Yatsenyuk was also cautious, saying it was "premature" to speak about an accord.
"These were just discussions. I have no reason to trust Putin," he told the television channel ICTV.
Russian Energy Minister Alexander Novak said last week one compromise could see Moscow lower the amount of debt repayments it expected to see this year to $1.45 billion from $3.1 billion.
The new price is 20 percent less than the figure Moscow began charging Ukraine after it cancelled a special rebate it offered ousted president Viktor Yanukovych for his decision last year to reject the fateful EU pact.
Ukraine paid Russia an average price last year of $413.5 per 1,000 cubic metre after agreeing to tough terms under the pressure of a previous Gazprom supply cut in 2009.
Economists said the rate was the highest in Europe and largely responsible for the budget shortfalls that had forced Kiev to rely on Western financial assistance.
The discount for Yanukovych was meant to bring the rate closer in line with the one paid by Gazprom's main EU clients.
Persistent disputes have seen Russia launch expensive new pipeline projects designed to bypass Ukraine.
EU nations have in turn been looking for ways to cut their Russian fuel dependence -- a slow process that still sees Europe purchase a third of the gas it consumes from Gazprom.
Nearly half that amount currently flows through Ukraine's pipeline network.
But EU powers such as Italy -- reliant on the Ukrainian link for all of its Russian supplies -- had feared that Kiev may be forced to tap into those flows once the winter heating season begins.