MOSCOW AGREED last night to allow European Union representatives to monitor Russian gas supplies flowing across Ukraine, a deal which should allow it to resume exports to Europe, according to EU presidency-holder the Czech Republic.
The breakthrough came after talks in Brussels in which the EU urged the two sides to swiftly end a crisis that has led to around 20 countries - including many EU members - suffering a complete halt or severe drop in gas imports.
Gazprom cut supplies to Ukraine on New Year's Day over its alleged failure to pay its 2008 fuel bill, and then stopped transit shipments to Europe after accusing Kiev of illegally siphoning off those supplies.
"This deployment (of monitors) should lead to the Russian supplies of gas to EU member states being restored," Reuters quoted the EU presidency as saying in a statement.
Earlier, Russia and Ukraine blamed each other for wrecking a potential deal to end the gas crisis, after both sides rejected the other's terms for monitoring gas supplies to the EU. Ukraine agreed to let EU representatives monitor the flow of Russian gas across its territory, but Moscow demanded that its own officials join the observation team - something that Kiev rejected, according to Kremlin-controlled energy company Gazprom.
At least 65,000 households were without heat yesterday in Bulgaria, which relies on Russia for virtually all its gas. For the second day running, scores of schools and kindergartens were closed across the country, and street lighting and heating on public transport were scaled back in Sofia.
Officials halted gas flow to more than 70 large firms and reduced supplies to more than 150 others as they sought to protect Bulgaria's dwindling gas reserves.
In neighbouring Serbia, about 900,000 people were thought to be without heat and several hospitals were forced to close, before Hungary agreed to pump some of its reserve gas across the border to ease the situation in the badly hit northern Serb region of Vojvodina, which is home to a large Hungarian minority. In Sarajevo, most of whose 400,000 residents rely on gas heating, the prime minister of Bosnia's Muslim-Croat region sent a letter of appeal to Gazprom.
"Temperatures are as low as minus 15 (Celsius), the country does not have any natural gas reserves and the capital and its citizens rely on gas for heating," Nedzad Brankovic wrote.
As EU officials said the crisis reinforced their fears about relying for energy on Russia, some Balkan states appeared to be questioning the value of their close relationship with Moscow.
"It turns out that by threatening Europe through this dispute with Ukraine, Russia is in fact punishing mostly Bulgaria and Serbia, which are its main traditional (allies) in the Balkans," wrote Serbia's Danas newspaper.
EU Foreign ministers meeting in Prague earlier yesterday said it was "unacceptable for the EU to see its citizens and enterprises suffering from gas shortages due to the non-respect by of their contractual obligations".
French president Nicolas Sarkozy and German chancellor Angela Merkel, meeting in Paris, warned Russia and Ukraine to honour their obligations.
Borys Tarasiuk, chairman of the Ukrainian parliament's committee on European integration said: "What you are observing is a demonstration of the punishment of Ukraine which started after the Orange revolution."
Vladko Todorov Panayotov, an MEP from Bulgaria, said children were dying because of the crisis.