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Monday, 01 December, 2008, 23:10 GMT | more >>

Kiev could tap EU flows



By Upstream staff 

Ukraine hinted it would cut flows of Russian gas to Europe through its pipelines if it ran short of supplies, after Gazprom halved deliveries to Kiev in a row over payments.

A similar dispute between Moscow and Kiev at the start of 2006 ended up in interruptions of gas to Europe, triggering a political crisis and leading to questions about Russia's reliability as an energy supplier.

Almost a quarter of Europe's gas comes through Ukraine.

Both Ukraine and Russian gas export monopoly Gazprom said deliveries to Europe were running normally for now. But the European Union voiced concern and urged both sides to "quickly find a definitive solution to this commercial issue".

Ukraine's state gas company Naftogaz Ukrainy said in a statement it reserved the right to take "appropriate action" if Ukraine's energy security came under threat.

"Naftogaz declares that it can guarantee uninterrupted transit for European consumers until such time as Ukraine's energy security comes under threat," the company said in a statement.

"In the event that Gazprom continues blatantly to violate technical agreements between the two countries by reducing volumes of Central Asian gas to Ukraine, Naftogaz reserves the right to introduce appropriate, assymetrical actions to defend the interests of Ukrainian consumers," it said.

Gazprom insisted that European consumers would not be affected.

"Export supplies of gas will be provided in full," Gazprom spokesman Sergei Kupriyanov told Reuters.

"Gazprom is ready to continue negotiations and appeals to the Ukrainian authorities to settle all the outstanding matters in the most urgent manner".

He said that Gazprom had halved gas supplies as of this afternoon and more cuts could follow if no deal is reached over Kiev's debt for previous deliveries.

Gazprom chairman Dmitry Medvedev was elected as Russia's next president on Sunday but it was not clear whether he played any role in the decision. Diplomats here say most key Gazprom decisions are taken personally by President Vladimir Putin.

However it emerged Medvedev has asked Yushchenko to settle its gas debt to Moscow.

"(Russia) is expecting Kiev to intensify efforts in solving its gas debt problem," Medvedev was quoted as saying by Interfax news agency.

Gazprom blamed Ukraine for the latest cuts, which take effect at 1700 GMT today and amount to a further 25% reduction from yesterday's initial 25% cut. Ukraine will get around 70 million cubic metres of gas per day, 50% of the usual amount.

Russia said Kiev owed $600 million in unpaid bills and had not resumed negotiations since it threatened to reduce supplies.

Though all of Gazprom's exports are reaching Europe, Ukraine said the company had not paid transit fees for gas going to Europe since December, a statement denied by Gazprom.

Ukrainian president Viktor Yushchenko had last month reached an agreement on the gas dispute during talks with Putin but this appears to have unravelled, following a visit by stridently pro-Western Ukrainian prime minister Yulia Tymoshenko to Moscow.

Ukraine's opposition Party of the Regions, which is more pro-Moscow than the government, blamed Tymoshenko's administration for the mess.

"The significant cuts in supplies of gas from Russia, resulting from the current government's lack of professionalism, will shut down industry and leave Ukrainians to freeze in their homes," it said in a statement.

Meanwhile, the International Energy Agency (IEA) said Russia's approach to resolving a gas payments row with Ukraine was "excessively harsh" and urged the two countries to resolve the dispute in a more commercial way.

"The technique of cutting off supplies to acheive those higher prices is excessively harsh," Ian Cronshaw, IEA's head of energy diversification division, told Reuters. "We would hope that the dispute would be settled in a more commercial way."


Tuesday, 04 March, 2008, 12:51 GMT  | last updated: Wednesday, 05 March, 2008, 07:52 GMT

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