Russia says Kiev will have to pay for rebel gas supplies

Russia could offer Ukraine more favourable terms for its gas supplies, following months of disagreements over the price Kiev pays for natural gas, according to Russian energy minister Alexander Novak.

A temporary supply deal, brokered by the European Union, is due to expire at the end of March. A $100 per 1,000 cubic metres 'discount' will also expire, and the two sides will have to come together to negotiate a new deal over the coming weeks.

The possibility that Russia will use its dominance over Ukraine's energy supply to boost the rebellion in eastern Ukraine looms again.

Novak told Reuters news agency that Russia could relax the terms of its gas supplies to Ukraine but he also said that Kiev would also have to start paying for gas deliveries to rebel-held territories in eastern Ukraine.

Moscow has flip-flopped on the question of who would pay for energy supplies to the rebel-held territories, at first suggesting it would foot the bill but later backtracking and warning Kiev that it would have to pay.

The Ukrainian government has refused to pay for gas deliveries to areas in Donetsk and Lugansk where pro-Russian rebels have seized towns and cities and declared their own autonomous republics.

Russia's state-run gas giant Gazprom removed a discount on the gas it sold to Kiev last April, effectively almost doubling the price. Kiev refused to pay the inflation price, which eventually resulted in Russia cutting off gas supplies to Ukraine for a six-month period.

"A discount is possible under the contract as well – no separate (summer) packages are needed if Ukraine and Russia reach an agreement. Take-or-pay (suspension)...is also possible, it depends on the talks between companies," Novak said on Wednesday, as quoted by Reuters.