10 countries cut off as Russia-Ukraine gas dispute spreads

McClatchy NewspapersJanuary 6, 2009 

MOSCOW — The Russian-Ukrainian dispute over natural-gas supplies took a dramatic turn for the worse Tuesday as supplies were reduced or cut off to at least 10 European countries.

The countries involved include Greece, Austria, Turkey, Germany, Romania and Bulgaria, according to statements by energy officials and news accounts.

If Russia, which supplies the gas, and the former Soviet republic, through whose territory it transits, don't come to terms soon, there could be serious consequences for Europe in the middle of winter. About a quarter of Europe's natural gas comes from Russia, and some 80 percent of that amount transits Ukraine.

The effect on European countries varied: Bulgaria, for instance, relies heavily on Russian gas, and two of its cities were reported to be running out of natural gas. However, West European countries such as Germany and Austria, which have months of reserves and other suppliers, expected no difficulties soon.

The long-simmering battle over pricing and debt boiled over on New Year's Day, when Russia halted gas shipments for Ukrainian domestic consumption. Russia then accused Ukraine of stealing gas that was passing through its territory and shutting down three main gas pipelines that supply Europe. Ukraine has denied the accusations.

While both countries have said they're ready to negotiate, the lines appeared to be hardening Tuesday.

A spokesman for the Russian state gas monopoly Gazprom said that the company would supply less than half the amount of natural gas that Europe had requested — 64.7 million of 130 million cubic meters — and demanded that Ukraine supply the remaining 65.3 million to compensate for stolen supplies, according to Interfax, a Russian news wire.

On Tuesday evening, Gazprom Chief Executive Officer Alexei Miller told Russian Prime Minister Vladimir Putin that "if Ukraine fully halts gas transit in the western direction for consumers in Central and Western Europe, we see no reason for pumping gas to the border with Ukraine."

Ukraine and its national energy company, Naftogaz Ukrainy, put the blame on Russia for significantly reducing the gas it sends to Ukraine for transit to Europe. Gazprom has acknowledged thinning gas deliveries in the past few days, but says that the reductions are in direct proportion to the amount of gas it alleges Ukraine has stolen.

Russian officials who control Gazprom cast the matter as a straightforward business dispute, but many Ukrainian analysts and officials have long charged that Russia wants to use gas disruptions to discredit Ukraine and its attempts to join the European Union and NATO.

The aggressive push for NATO membership by Ukrainian President Viktor Yushchenko has in particular raised the ire of Russian leadership. Yushchenko's hostility toward Russia is deep; his face still bears the scars of a 2004 poisoning that many blame on the Kremlin.

The gas dispute occurs five months after Russia went to war against Georgia, the other former Soviet nation on Russia's borders that's mounted a campaign to join NATO.

Talks between Russia and Ukraine broke down late last month, with Russia asking for $250 per 1,000 cubic meters of gas, an increase from $179.50, and Ukraine countering with an offer of $201. On Sunday, Gazprom raised its asking price for gas to Ukraine to $450. Also at issue were debt payments: Ukraine says that a $1.5 billion transfer to a Gazprom intermediary satisfied its financial obligation, but Gazprom says it's still owed $614 million.

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McClatchy Newspapers 2008

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