Russia warns over gas supply disruptions

December 23, 2008
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, MOSCOW, December 23 – Russia raised the spectre of gas cuts to Europe over the winter, warning on Monday that it did not rule out supply disruptions as a result of a dispute with Ukraine over non-payment of debts.

"It is not ruled out that the current position of the Ukrainian side and some of its actions could lead to disruptions in the stability of gas supplies to Europe," First Deputy Prime Minister Viktor Zubkov said in a statement.

Russian energy giant Gazprom maintains that Ukraine\’s state gas company Naftogaz owes it up to 2.4 billion dollars in debts and has warned of delivery cuts if the outstanding debt is not cleared.

Ukraine is a major transit country for Russian gas exports to the European Union and a dispute over gas prices led to a brief interruption of gas supplies in several EU countries in January 2006.

In a message sent to European governments, Zubkov laid the blame for the new dispute squarely at the door of Ukraine\’s pro-Western leaders, who he said had taken an "unconstructive position."

"I want to assure you that Gazprom will as always fulfil its contractual obligations before its European clients," said Zubkov, who also chairs Gazprom\’s board of directors.

"The responsibility for a worsening critical situation that could have an impact on European gas consumers lies fully with the Ukrainian side and the key to regulating the situation lies with them," he added.

Last week, Ukraine repaid one billion dollars of debt to Gazprom for gas pumped in September and October, but Gazprom warned on Friday it had no legal obligation to supply gas to the country if the debts were not paid in full.

The complexity of negotiations is exacerbated by Gazprom\’s desire to charge higher prices to Kiev under a new contract, something Ukraine is reluctant to agree amid the global financial crisis.

Tensions are rising ahead of the January 1 deadline for the signing of a new contract, a situation compounded by the prickly ties between Moscow and Kiev and Ukraine\’s apparently perpetual political turmoil.

The Ukrainian economy is also in grave trouble, with its currency losing around half its value over the last six months and industrial production in freefall.

Russian statement expressed "bewilderment" that Ukraine had been unable to repay the debts despite a 16.5-billion-dollar IMF loan aimed at helping the country through the financial crisis.

Ukraine currently pays Russia 179.5 dollars for 1,000 cubic metres of gas but Gazprom has warned that price could rise to 400 dollars for 1,000 cubic metres from next year.

In Brussels, European Commission spokesman Ferran Tarradellas said any supply cuts would be less disruptive than three years ago, noting that there was no comparison between now and the extremely cold winter of 2005-2006.

"The rewww.capitalfm.co.keirs of European gas are 90 percent full and the level of the Ukrainian rewww.capitalfm.co.keirs is also very high," he said.

But an aide to Ukrainian President Viktor Yushchenko vowed Kiev would not siphon off any Russian gas transiting through its territory even if Gazprom reduced deliveries.

"Ukraine will not steal gas from anyone," said Olexander Shlapak, the deputy head of the presidential secretariat, quoted by the Interfax news agency.

He said that Ukraine currently had 16 billion cubic metres of gas stocked in underground rewww.capitalfm.co.keirs which would mean the country is well supplied even if a contract with Russia is not signed.

By contrast with the months-long unresolved row with Ukraine, Russian President Dmitry Medvedev and his Belarussian counterpart Alexander Lukashekno on Monday agreed terms for the delivery of Russian gas to Belarus in 2009.

The Kremlin did not disclose the new price but a member of the Belarussian delegation quoted by the Interfax news agency said it was "completely acceptable."

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