London (Platts)--20Oct2014/947 am EDT/1347 GMT

International sanctions and the recent sharp fall in crude oil prices may have prompted Russia to seek a compromise in talks with Ukraine about natural gas supplies, Prime Minister Arseniy Yatseniuk said Sunday.

The EU and US should continue to pressure Russia in order to achieve even greater results, Yatseniuk said in an interview aired late Sunday by TSN-Tyzhden, a television news show.

"What does Russia have? They have two pedals: one is gas and the other one is oil. That is all. Therefore, the decline in oil price by more than 20% is an incredible blow to the Russian economy," Yatseniuk said.

"If we continue to keep the unity with our European and American partners, only then we will achieve the results."

Russia suspended gas supplies to Ukraine on June 16, citing disagreements on prices. The countries made progress in talks between their presidents -- Russia's Vladimir Putin and Ukraine's Petro Poroshenko -- on Friday.

The talks, now involving energy ministry officials, were supposed to continue on Tuesday in Brussels.

Poroshenko, in a sign of a breakthrough, indicated Ukraine has been willing to pay $385 per 1,000 cubic meters for Russian gas during the winter --until March 31 -- and $325/1,000 cu m during the summer, reflecting different levels of demand.

WARM HOMES

"Following the talks we can say that Ukraine will have gas and it will be warm in the homes of Ukrainians," Poroshenko said Saturday.

"This is the result of yesterday's agreement, provided that Ukrainian national interests are protected."

The progress came with Ukraine facing a shortage of at least 5 billion cu m of gas during the upcoming winter, according to Yatseniuk.

Ukraine had 16.76 Bcm of natural gas in underground storage facilities on October 18, or about 52.5% of capacity, according to Gas Storage Europe, a non-profit Brussels-based organization that provides energy statistics to the EU.

The figures showed Ukraine failed to meet its original target of 17.2 Bcm by October 15, the date when the six-month heating season usually begins.

Facing gas shortages, the government recently decided to postpone the start of the heating season to November 1.

Yatseniuk said the government was ready to start heating. "We have the resources needed to turn on the radiators," Yatseniuk said, adding weakening oil prices will probably further reduce the price of natural gas.

--Alexander Bor, newsdesk@platts.com
--Edited by Dan Lalor, daniel.lalor@platts.com

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