The European Union will help Ukraine pay the $2 billion it owes to Russian gas giant Gazprom, a top official has said, as part of an aid package reportedly worth more than €1 billion.
EU Energy Commissioner Guenther Oettinger said that "payment of the outstanding Ukraine bills is high up in the Commission's aid package," expected to be adopted tomorrow.
Ukraine's state gas firm Naftogaz "owes about two billion dollars to Gazprom and we are going to help it pay this bill," he said, adding the EU could even supply the country with gas.
EU officials are due to nail down the details of the Ukraine aid package tomorrow, ahead of an emergency EU leaders' summit the following day.
Brussels has offered Ukraine €610 million ($840 million) in aid so far and reports suggest the 28-member bloc could free up an additional €500 million as the West faces off with Russia in a Cold War-style confrontation.
However, the package in the pipeline is a far cry from the €25 billion over two years which the newly installed Ukrainian government says it needs.
It is expecting the IMF to provide €15 billion this year.
Earlier, the United States pledged $1 billion in loan guarantees to Ukraine.
"We are mutually dependent: the European Union needs Russian gas and Russia's economy needs the money from its gas," Oettinger stressed.
The EU may even find itself providing gas to Ukraine, given the two are connected by a gas pipeline which allows the flow to be reversed - a legacy of the 2009 gas dispute between Ukraine and Russia.
"Slovakia could reverse the flow towards Ukraine," Oettinger said.
Yesterday, the Commission sent a delegation of experts to Kiev to assess the troubled country's financial needs.
On Sunday, finance ministers of the G7 grouping of leading world economies said they were determined to support Ukraine's battered economy, providing the country agreed to the economic reforms sought by the IMF.
EU agrees to freeze 18 Ukrainians' accounts
European Union governments have reached a preliminary agreement to freeze the assets of 18 Ukrainians, at Kiev's request, after Ukraine's new rulers said billions in public funds have gone missing.
The decision still needs to be made final in the coming days and follows similar moves last week by Austria, an EU member, as well as Switzerland and Liechtenstein.
Austrian authorities have included Ukraine's ousted president, Viktor Yanukovich, in their list of targets but it was not clear whether his assets would now be frozen throughout the 28-nation bloc.