Russia Warns Ukraine Against Siphoning Off Europe-Bound Gas

MOSCOW, Russia -- Russian natural gas giant Gazprom said on Sunday it may take Ukraine to an international court if the former Soviet republic uses gas intended for European clients from a pipeline running through its territory without permission.

Gazprom headquarters building

"Eighty percent of our gas transits through Ukraine, which was the motive behind our Ukrainian colleagues' decision to start to blackmail us ... But we are ready to go to the Swedish court in the event of Ukraine's unsanctioned use of gas," deputy chairman Alexander Medvedev told Channel One television, referring to the Stockholm International Court of Arbitration, which acts as a neutral body for resolving East-West trade disputes.

Ukraine buys Russian gas at a discounted price of 50 US dollarsper 1,000 cubic meters, but Russia has asked Ukraine to pay more than quadruple the current price and offered cash payments for gas transit.

Ukraine said it is willing to switch to market prices for Russian gas but insisted it needs a transitional period to adjust its economy.

Medvedev repeated previous warnings that the company will shut the taps for Ukraine at 10:00 a.m. (0700 GMT) on Jan. 1 if no deal is struck with Ukraine by then.

"Time is running out for Ukraine to make a decision," he said.

The feud over gas prices between the two former Soviet republics has raised fears that supplies could be suspended.

Gazprom has suggested Ukraine uses shares in its gas transport system as payment for gas supplies if it doesn't have enough cash on hand, but the head of Ukrainian national gas company, Naftogaz Ukrainy, rejected the proposal on Sunday.

"We see no need to hand over control over our gas transportation system to anybody. Ukraine is capable of managing it effectively. The status of the gas transportation system will remain unchanged," company chairman Oleksiy Ivchenko said, quoted by the Interfax news agency.

Source: China View

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