Reuters reported that Ukrainian state energy firm Naftogaz will pay Russia Gazprom for October gas. Naftogaz must pay about USD 460 million by November 7th.

A Naftogaz spokesman said "We are working on the payments. We have no reason not to pay Gazprom."

Mr Viktor Yushchenko President of Ukraine reiterated the stance he has assumed since his bitter rival Prime Minister Ms Yulia Tymoshenko signed gas price deal with Moscow in January that Naftogaz will find it difficult to pay for the gas. Mr Yushchenko said "The only source of funds to pay for the October gas is more borrowing."

EU Commission President Mr Jose Manuel Barroso urged Ukraine on Thursday to ensure timely payments and avoid rows with Russia that could lead to gas supply cuts to European consumers.

The EU receives about 20% of its gas from Russia through Ukrainian pipelines. A pricing dispute led to supply cuts impacting hundreds of thousands Europeans in January.

European leaders have started to become nervous about winter gas supplies after Russian Prime Minister Mr Vladimir Putin said Mr Yushchenko was obstructing the work of the central bank and the government. The central bank denied this.

So far this year Naftogaz has paid all its bills on time but some of the payments involved several transactions the central bank has printed money before to loan to state banks who then lent the money to Naftogaz.

(Sourced from Reuters)