(MENAFN- AFP) The EU, Russia and Ukraine were trying to find the money on Thursday for Kiev to settle a bitter gas supply dispute with Moscow, edging towards an accord as the armed conflict claimed more lives.
As officials gathered for another round of talks in Brussels, Ukraine said seven of its soldiers had been killed by pro-Russian rebels in the biggest daily toll in more than two weeks while NATO warned the alliance was "vigilant" in the face of increased Russian military activity in European airspace.
Meanwhile the prospect of Russia recognising elections Sunday by pro-Moscow rebels in the parts of eastern Ukraine they control threatened to harden divisions on the ground, undercutting EU efforts to get Moscow to stick by a September peace roadmap.
In Brussels, the immediate question was money and cash-strapped Ukraine's lack of it.
Overnight talks broke up before dawn Thursday without producing a deal as Russia demanded that the European Union first agree with Ukraine how to pay Kiev's outstanding bills and finance gas deliveries through to March 2015.
"The European Commission must reach an agreement with Ukraine over the question of financing," a spokesman for Russian gas giant Gazprom told AFP in Moscow.
"Otherwise, negotiations make no sense."
- Ukraine seeks funds -
In Kiev, Prime Minister Arseniy Yatsenyuk said he would ask the United States and Germany for "additional financial instruments for Ukraine that would help stabilise the budget and pay our energy bills."
The EU gets about a third of its gas from Russia, of which about half transits via Ukraine.
The EU wants to avoid a repeat of 2006 and 2009 when Russia turn off the taps on Ukraine, disrupting deliveries onwards to Europe during two very cold winters.
In June as the Ukraine crisis deepened, Russia cut supplies again, demanding that Kiev settle its outstanding bills and pay up front for any future deliveries.
Earlier this month, EU Energy Commissioner Guenther Oettinger negotiated an outline deal whereby Ukraine would pay $3.1 billion ($4 billion) by the end of the year to settle its outstanding bills to Russia.
In return, Russia would cut the price for deliveries through to March 2015 by some 20 percent to $385 (302 euros) per 1,000 cubic metres.
Oettinger said at the time an agreement was close, but it quickly fell apart when it became clear Ukraine could not pay and promptly asked the European Union for a new loan of 2.0 billion euros.
It is far from certain that Brussels is ready to help finance the deal, given EU aid commitments to Ukraine worth 11 billion euros, and large loans from the International Monetary Fund.
Russian negotiators said they were returning to Brussels for the next session of talks, expected to resume around 1830 GMT.
"We are heading to the airport," Gazprom spokesman Sergei Kuprianov said, adding that there was an "expectation" that the EU and Ukraine had reached agreement on how to pay its debt to Moscow.
For his part, European Commission head Jose Manuel Barroso said a deal was "within reach" and called on both sides "to seize the opportunity and conclude the negotiations".
Speaking later, he said he hoped "we will have an important moment... because apparently we now have an accord that the Commission mediated, organised between Russia and Ukraine."
Barroso gave no further details and officials declined to comment.
- Continued loss of life -
The wider crisis showed no immediate sign of improvement.
NATO chief Jens Stoltenberg said the US-led alliance remained vigilant after an upsurge in Russian military activity in European airspace earlier this week.
In response, several NATO countries launched a series of intercepts, meant especially to help reassure east European allies unnerved by Russia's intervention in Ukraine.
The latest Ukraine military losses bring the total to 160 since a ceasefire was agreed in September, while more than 3,700 people have died since the start of fighting in April after Russia annexed Crimea.
The EU has progressively imposed tough economic sanctions on Russia for its role in the Ukraine crisis, sparking retaliation in kind.
Member states agreed earlier this week to leave the sanctions in place after a regular review, and on Wednesday, they condemned Moscow's willingness to recognise the planned rebel polls.
Agreeing EU sanctions was especially painful for many EU member states with close economic ties with Moscow, such as Germany and Italy, along with some of the newer eastern European countries.
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