European Gas Firms Seek Deal On Ukraine -GDFSuez

Under the deal, the European companies are to provide `technical gas`, which is needed to pressurise the pipeline network.

French utility GDF Suez said on Saturday that European gas companies had sent Russia's Gazprom a proposal for a temporary solution to allow Russian gas to resume flowing to Europe through Ukraine.

The move was widely expected after talks on Friday in Berlin between Gazprom and Russian Prime Minister Vladimir Putin and European companies including GDF Suez, Italy's ENI and Germany's E.ON.

Under the deal, the European companies are to provide "technical gas", which is needed to pressurise the pipeline network, to allow a resumption of gas supplies from Russia to Europe through Ukraine.

GDF Suez said on Saturday that the proposal would help Gazprom and Ukraine's Naftogaz finalise a bilateral agreement in their dispute over a price for Russian gas for 2009.

That dispute has led to a disruption, in the depths of winter, in supplies of Russian gas that is delivered to large parts of eastern and central Europe via Ukraine.

The European Union gets a quarter of its gas needs from Russia, and 80 percent of this is piped through Ukraine.

Gazprom said on Friday it would sell the technical gas to the European consortium at market price: about $450 per 1,000 cubic metres.

GDF Suez's statement said the European companies were "ready to finalise an agreement" with Gazprom over the course of this weekend.

The German energy group RWE said it had joined the European consortium, and that it would start supplying Slovakia with gas from Sunday.

Gazprom Deputy Chief Executive Alexander Medvedev said on Friday that Austria's OMV, the Dutch gas trading company GasTerra B.V. and the German-Russian trade joint venture Wingas, part of the BASF group, had also been invited to participate.

Naftogaz has said it needs 360 million cubic metres of "technical gas" in January, plus another 600 million cubic metres in February and the same amount again in March.

According to Reuters calculations, a price of $450 per 1,000 cubic metres would cost the consortium $162 million for January and $270 million for each of February and March.

The question of reimbursement for the consortium's gas is likely to remain on hold until Ukraine and Russia reach agreement on a price.