By Vanessa Mock and Laurence Norman
BRUSSELS--Ukraine and Russia were set to resume talks on
Thursday to resolve their natural-gas dispute, with officials
scrambling to secure funding for Kiev to pay for gas
deliveries.
Officials said they were confident they would be able to patch
together a financing plan on Thursday to enable Ukraine to pay
upfront for Russian gas, in a move that would clear the final
hurdle to a deal.
European Commission President José Manuel Barroso said that an
agreement was "within reach" and urged both sides to take the
chance to clinch a deal. Mr. Barroso called Ukrainian President
Petro Poroshenko several times as negotiations in Brussels spilled
into the early hours of Thursday.
The talks under way in Brussels, the latest in a half-year long
round of high-level meetings, come amid fears of possible gas
shortages in Europe if the flow from Russia to Ukraine isn't
restored.
The European Commission said officials currently were "in very
intense consultations" to pave the way to a deal ahead of Thursday
evening, when officials from Kiev, Moscow and Brussels were
expected to resume formal negotiations.
Kiev still needs to raise money to cover some of its gas debts
to Russian gas monopoly OAO Gazprom, as well as a $1.6 billion
upfront payment it would need to make to receive four billion cubic
meters of gas for November and December. Kiev said last week it
would pay $3.1 billion toward its past debts, in line with the
terms of the tentative deal.
EU officials said they were considering a range of financing
tools, including a bridging loan of around $1.5 billion to pay for
future gas deliveries, which could be arranged with the
International Finance Cooperation, which is the World Bank's
lending arm, and the European Bank for Reconstruction and
Development.
"We're really looking in every possible purse," one official
said.
Another person familiar with discussions said Moscow was eager
to secure a deal on Thursday, provided Ukraine could guarantee it
had enough money to make the agreed payments. It wasn't clear
whether a deal would simply cover the final two months of 2014, or
would also seek to cover the first months of next year.
Two senior EU officials said part of the money Ukraine would use
to pay for Russian gas would come from an International Monetary
Fund loan which was supposed to go toward building up the country's
reserves. An IMF official attended Tuesday's meeting. The
Washington-based lender would need to formally approve this change
in the use of its funds.
The Wall Street Journal reported Tuesday that the European
Commission, the EU's executive, is close to signing off on two more
disbursements of loans promised to Ukraine, money that would give
Kiev some EUR760 million ($968 million) in additional funding by
the end of the year.
The EU official said there will also be a third
balance-of-payments package for Ukraine, although this would need
the backing of EU governments and disbursements of this cash could
still be months away.
The current dispute was triggered after Russia nearly doubled
Ukraine's gas price in April after the ouster of Ukraine's
pro-Kremlin government.
Since then, the EU's energy chief, Günther Oettinger, has been
pushing for a deal to avoid a repeat of similar disputes in 2006
and 2009, which led to natural gas shortages in Ukraine and several
EU countries.
Russian gas accounted for more than a third of the EU's
natural-gas imports last year, with around half of those supplies
piped through Ukraine.
Write to Vanessa Mock at vanessa.mock@wsj.com