Russia today offered to restore the discounted gas price it granted Ukraine under the ousted pro-Russian president, but Ukraine demanded an even better deal and called for arbitration to settle the dispute.
Speaking in Moscow, Russian President Vladimir Putin said Russia was offering the discount as a "partnership deal."
Russia's energy minister, Alexander Novak, specified the price offered as USD 385 per 1,000 cubic meters of gas.
"We believe that our offer is more than in a partnership spirit, aimed to support the Ukrainian economy at a rather difficult time," Putin said in televised remarks. "But if our offers are rejected it means we will enter another stage. This is not our choice. We do not want it."
Russia and Ukraine have been locked for months in a dispute over the price of Russian gas supplies and Ukraine's debt for previous deliveries.
Moscow has threatened to turn off the tap if Ukraine fails to settle the multibillion dollar debt, but has repeatedly pushed back the deadline after Ukraine paid off part of the debt.
European Union-brokered talks between the two countries in Brussels today failed to reach a compromise over the price.
The bruising gas dispute comes amid continuing fighting in eastern Ukraine, where government forces have battled pro-Russian rebels for two months.
The insurgents have pushed for joining Russia following Moscow's annexation of Ukraine's Crimean peninsula in March, but Putin has ignored their appeal in an apparent bid to avoid another round of crippling Western sanctions.
Putin also seemed eager to avoid cutting off gas to Ukraine, a move that would likely disrupt shipments to European customers via pipelines crossing the Ukrainian territory.
He today emphasised that the latest offer would restore the price Ukraine had under pro-Russia President Viktor Yanukovych.
In December, Russia offered Ukraine an even lower price of USD 268 as it sought to give a financial lifeline to Yanukovych, who was facing massive protests triggered by his decision to ditch a pact with the European Union and opt for closer ties with Moscow.
After Yanukovych was chased from power in February, Russia denounced his ouster as a "coup" and annulled all gas discounts, bringing the price back to USD 485 per 1,000 cubic meters in line with a 2009 contract.
Ukraine has refused to pay for Russian gas, calling the price politically-motivated and demanding that Moscow lowers it.
