KIEV, Jan. 18 – Ukraine and Russia made progress in natural gas talks over the weekend that may lead to a deal on Monday opening supplies to the European Union, Prime Minister Yulia Tymosheko said.

Tymoshenko, who spent five hours in talks with her Russian counterpart Vladimir Putin in Moscow, did not disclose a possible gas price that Ukraine will have to pay in 2009.

But Putin said Ukraine may qualify for a 20% discount on gas price that is paid by most European countries if the country leaves the tariffs on transit of Russian gas to Europe unchanged.

The parties may have also agreed in principle on the way gas prices will be figured out from now on - by a special formula, similar to the one used by most European countries in defining the prices, perhaps avoiding annual showdowns between the two.

Tymoshenko is due to visit Moscow again on Monday, apparently to join the ceremony of signing the deal, according to Maryna Soroka, Tymoshenko’s spokeswoman.

But even officials, who joined the talks between Tymoshenko and Putin, were not sure what price will Ukraine have to pay in 2009, leaving the issue on a shaky ground.

Bohdan Sokolovskiy, the energy security envoy for President Viktor Yushchenko who joined the talks in Moscow, told AFP on Sunday that he “hadn’t yet seen the final price on paper.”

The Tymoshenko government drafted the 2009 budget forecasting the gas price at $250 per 1,000 cubic meters, suggesting that any grater price may widen the government’s budget deficit this year. Ukraine paid $179.5/1,000 cu m for gas in 2008.

Former Prime Minister Viktor Yanukovych, the leader of the opposition Regions Party, said Sunday that any price greater than $250/1,000 cu m in 2009 would lead to the “collapse of the economy.”

But Tymoshenko was optimistic that the deal will establish affordable gas prices and will also open the way for Russian gas transit to the EU.

“That’s true, the talks were not easy,” Tymoshenko said in comments televised from Moscow after ending her talks with Putin. “But we have come to the agreement that allows signing all the papers.”

The deal, if signed, would reopen supplies of Russian gas to the EU. These supplies have been suspended since the morning of Jan. 7.

The suspended gas supplies elevated concerns within the EU, which relies on Russian gas supplies to meet a quarter of its annual gas needs. Russia moves about 80% of its Europe-bound gas via pipelines in the Ukraine.

“After the papers on gas transit and gas purchases are signed, all gas supplies to Europe will be resumed,” Tymoshenko said.

Putin said that in order to qualify for the 20% discount, Ukraine will have to leave its fee on transit of Russian gas unchanged at $1.8 for shipping 1,000 cu m of gas for a distance of 100 km.

The fee is one of levers that Ukraine has been using in its standoff with Russia.

Most European countries charge a much higher price, between $3.5 and $12, compared with Ukraine’s $1.8, but a steep hike of the fee by Ukraine would hurt Russia’s Gazprom financially.

Ukraine shipped a total of 112.1 billion cu m of natural gas to Europe in 2007, down from 113.8 billion cu m shipped in 2006 and down from 121.5 billion cu m shipped in 2005, according to the Ukrainian government. (sb/ez)