The European Union's efforts to restore natural-gas supplies from Russia stumbled on Thursday, as Moscow said it won't turn on the taps until its experts were included in an international mission to monitor Ukraine's gas-transit system.
As hundreds of thousands of Europeans remain without gas to heat their homes in midwinter temperatures, and more companies are cutting production in former Soviet-bloc countries such as Bulgaria, Hungary and Slovakia, EU officials said they were "disappointed" by the Russian move.
"We believe that the Russian side has no reason to refuse this proposal and not to allow the resumption of supplies into the Ukraine and EU countries," said Martin Riman, minister of industry and trade of the Czech Republic, which holds the EU's rotating presidency.
Late Thursday, a statement from Czech Prime Minister Mirek Topolanek said that he and German Chancellor Angela Merkel had secured agreement from Russian Prime Minister Vladimir Putin on how to deploy monitors, and that this should enable gas flows to restart.
A person familiar with Russia's position, however, said that the phone agreement with Mr. Topolanek concerned the deployment of monitors on Russian territory, and didn't resolve the dispute over the mission in Ukraine.
Russia turned off gas supplies to Ukraine on Jan. 1 in a dispute over prices, and the stoppage spread to Europe this week, with each side blaming the other. All gas supplies that go through Ukraine -- 80% of Russia's total gas exports to the EU -- have stopped.
Speaking to foreign reporters in Moscow, Mr. Putin lambasted the EU for its failure to sign a Russian version of the monitoring mission document, which would have included monitors from Russia's ministry of energy as well as from the EU.
"It's the moment of truth. When someone wants to solve a dispute like this they do everything they can," he said.
European Commissioner for Energy Andris Piebalgs said that the EU had no problem with including Russian monitors, but that it couldn't force Ukraine to accept them. Ukrainian officials couldn't be reached for comment Thursday evening.
Mr. Putin was dismissive of Ukraine's political leadership, describing it as corrupt and unable to make decisions. He also threatened to send future gas from the giant Shtokman gas field in the Barents Sea to U.S. markets. "We've earmarked most of the gas from Shtokman for Europe, but if this is how things are going to stay, we'll have to reconsider that," he said.
And he chided the EU for putting obstacles in the way of Russia's planned Nord Stream gas pipeline, which would bring gas supplies direct from Russia to Germany, circumventing transit nations such as Ukraine.
"If nobody had hampered our construction under the Baltic Sea it would be functioning already," he said, referring to environmental objections from some EU nations along the Baltic. Last year, shortly after the EU published an updated strategic energy review proposing to cut back on gas imports, Mr. Putin warned the EU that if it didn't want Nord Stream, Russia wouldn't build it, which would reduce the EU's energy security.
Thursday saw a whirl of negotiations in Brussels, as the EU sought to broker a deal between gas officials from Russia and Ukraine that would allow them to restore gas supplies. Russia had for days been asking for international monitors to be placed at key points along the Ukrainian transit network, so they could ensure Ukraine wasn't diverting gas designated for the EU for Ukraine's own domestic needs. As soon as that happens, Russia will turn the taps back on, OAO Gazprom Chief Executive Alexei Miller repeated Thursday.
But while Ukrainian officials on Thursday signed an agreement to accept monitoring of the country's gas-transit system by EU experts, they wouldn't accept Russian monitors, said Mr. Piebalgs. Russia balked at that, he said, though he tried to persuade Russia that EU monitors would be impartial. Mr. Piebalgs said the EU monitors would fly to Kiev, the Ukrainian capital, on Friday, to be ready for any deal. "It's now up to the Russians to decide what they would need to resume supplies," said Mr. Piebalgs.
The CEOs of Gazprom and of Ukrainian state energy company Naftogaz Ukrainy arrived in and left Brussels on the same aircraft Thursday, continuing negotiations along the way, Gazprom officials said.
In a potential concession to the Ukrainian side, Mr. Putin said Russia was ready to pay higher transit fees to Ukraine -- a key Ukrainian demand -- so long as Kiev, in turn, agreed to pay market rates for Russian gas. In such circumstances, he said, Gazprom would be ready to pay more than double the current transit rate.