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High-stakes Russia-Ukraine-EU gas talks begin in Brussels

Ukraine is seeking to reduce its dependence on Russian natural gas in the wake of a months-long cut in supplies -- the second in five years

Russia, Ukraine and the EU began crunch gas talks on Tuesday to resolve a bitter price dispute and end fears that Moscow could halt crucial energy supplies to Europe this winter.

The high-stakes meeting between Russian Energy Minister Alexander Novak, his Ukrainian counterpart Yuri Prodan and European Energy Commissioner Guenther Oettinger began as planned, a Commission spokeswoman said.

"We had bilaterals with both sides and a trilateral meeting will start very soon," spokeswoman Marlene Holzner said.

"It's not possible to say when the talks will end," she added.

Russia in mid-June cut supplies to Ukraine, demanding the new pro-Western government in Kiev pay sharply higher prices in advance for new deliveries after it ran up what Moscow claims is an unpaid bill of $5.3 billion (4.1 billion euros).

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That supply cut heightened concerns that Europe, which gets about a third of its gas from Russia of which about a half transits via Ukraine, could be badly affected by the dispute this winter.

But hopes for a deal improved after Ukrainian President Petro Poroshenko and Russian counterpart Vladimir Putin reached a preliminary deal at an EU summit last week in Milan.

According to Poroshenko, the agreement due to be completed in Brussels will see Ukraine meet Russia's demands and pay $385 per 1,000 cubic metres of gas for deliveries guaranteed through the end of March.

The new price is 20 percent lower than the price Moscow charged Ukraine after it cancelled a discount offered to former pro-Russian president Viktor Yanukovych.

In the draft accord, cash-strapped Kiev would pay $3.1 billion in unpaid bills to Moscow by the end of October, with a new contract to cover subsequent deliveries.

The major question is how Ukraine can pay for the debt and on Tuesday, as the talks in Brussels continued, the Commission said Kiev was requesting a further 2.0 billion euro loan from Brussels.

The loan request "will now be evaluated in consultation with the IMF and Ukrainian authorities, and a proposal will be made," Commission spokesman Simon O'Connor said.

In Milan last week, Putin implied an accord was close but urged EU governments to help Ukraine finalise the complex funding it needs to afford the deal.

German Chancellor Angela Merkel, speaking in Bratislava on Monday, said EU member states should do their part.

"Everyone must contribute, including Slovakia," Merkel told reporters in the Slovak capital.

"We're looking for a solution now. We don't have one yet and winter's already coming," she said.