A delegation from Ukraine's state gas company Naftogaz is to hold talks Tuesday in Moscow with Russian energy giant OAO Gazprom (GAZP.RS) on clearing Ukraine's massive gas debt, a government source said.
"The negotiations will take place on Tuesday and Wednesday," said the source.
The Russian company says Naftogaz owes some $2.4 billion and has warned of potentially crippling gas cuts if the debts aren't paid. Ukraine disputes some of the penalties imposed for late payment.
Kiev agreed last week to pay by Dec. 1 the debts owed for September and part of those owed for October. Gazprom has said part of this sum has now been paid back but not the full amount required.
Gazprom has also warned it could raise the price to $400 dollars per 1,000 cubic meters - more than double what Ukraine pays now - if the debt isn't paid.
Currently Ukraine pays Russia $179.5 per 1,000 cubic metres of gas, much less than what European Union countries pay. A sharp rise would be bad news for Ukraine's economy, which has been hit hard by the financial crisis.