Russia gives Ukraine more time to pay gas bill

Ukraine is unhappy with Gazprom's decision to increase sharply the price of its gas

Russia' Gazprom has given Ukraine more time to settle its gas bill after receiving a part payment of $786m (£469m).

The company had previously threatened to halt shipments of gas unless Ukraine paid its bill in full and agreed in future to pay in advance.

Gazprom says Ukraine still owes it almost $2.5bn.

Negotiations between the two sides will resume now that a part payment has been made.

Ukraine announced on Friday that it had made a payment, but has refused to settle the full amount in protest against Gazprom's recent 80% price increase.

'Short-term relief'

Russia said the money received on Monday covered gas shipped in February and March.

"We welcome Ukraine starting to pay back its debt and postpone the pre-payment regime until 9 June," said Alexei Miller, Gazprom's chief executive.

Analysts said the payment gave Ukraine a little more time to continue negotiating on the price of gas it buys from the gas giant.

"Even though the $786m seems to be less than expected, this could provide some short-term relief with regard to Russian-Ukrainian price negotiations," said VTB Capital.

Gazprom now charges Ukraine $485.50 per 1,000 cubic metres, against the old price of $268. At the new price, Ukraine is paying more for Russian gas than any other European country.

Almost 15% of gas used in Europe comes from Russia via Ukraine, which is why EU members are taking a particularly close interest in the stand-off, observers say.