Putin Warns Of New Ukraine Gas Crisis After Raid

MOSCOW, Russia -- Russian Prime Minister Vladimir Putin warned Thursday of the risk of a new gas crisis with Ukraine and Europe, saying he was "extremely worried" about a raid on the Ukrainian state gas company in Kiev.

Russian Prime Minister Vladimir Putin, seen here on March 05 in Moscow, warned Thursday of the risk of a new gas crisis with Ukraine and Europe, saying he was "extremely worried" about a raid on the Ukrainian state gas company in Kiev.

A January dispute between Russia and Ukraine resulted in the cutting of Russian gas supplies to Europe for almost two weeks, triggering the European Union's worst ever energy crisis.

Armed Ukrainian security service agents on Wednesday burst into the headquarters of the Ukrainian state gas firm Naftogaz to conduct a search, in a dramatic display of the country's internal tensions.

Putin said that "we can only be extremely worried about the possible consequences" of the raid.

"Once again the question has been raised about the reliability of this country (Ukraine)," he added.

The raid came as Russia set a March 8 deadline for payment by Ukraine of a 360 million dollar debt for February.

As Putin warned that failure to pay would lead to a halt in supplies to Ukraine and possibly European consumers, there was an immediate response from Naftogaz.

By the end of business hours Naftogaz said it had paid the February debt in full.

Naftogaz spokesman Ilya Savin said Naftogaz on Thursday paid the final 50 million dollars outstanding after it paid 310 million dollars earlier this week to Russian energy giant Gazprom.

Gazprom confirmed in a statement that "Naftogaz has entirely paid for gas deliveries in February."

The January dispute was eventually resolved with an agreement signed after talks in Moscow between Putin and Ukrainian Prime Minister Yulia Tymoshenko, a pro-Western figure who nonetheless has good relations with Russia.

Her domestic rival -- President Viktor Yushchenko who is targeting EU and NATO membership for his country -- is despised by Russia for his support of Georgia in its August war with Moscow.

The Naftogaz raid, conducted by the SBU Ukrainian security service which answers to Yushchenko, was seen as the latest step in the poisonous feud between the two politicians.

The SBU agents had notably been seeking documents over the January gas deal with Russia brokered by Tymoshenko, which Yushchenko has denounced as a sell-out.

Earlier, SBU investigators had failed to carry out another search at Ukrtransgaz, a Naftogaz subsidiary which operates Ukraine's gas pipeline network.

This time they were not accompanied by the armed agents who had caused Wednesday's drama and were blocked in the hallway by lawmakers belonging to the Tymoshenko parliamentary faction.

The turmoil in Ukraine coincides with a grave economic crisis in the country which has seen its industrial production nosedive and its currency halve in value against the dollar.

The country also risks losing the second tranche of an IMF loan -- its main source of foreign income this year -- due to budgetary strains. This prompted Standard and Poors last week to slash Ukraine's ratings to a pre-default level.

Ukraine's economy "is more or less already experiencing a balance of payments crisis" because of plummeting prices for exports, Standard and Poor's analyst Frank Gill told a conference call Thursday.

"The refinancing risk for the banking system is enormous," he added.

Bulgaria, one of the EU states worst hit by the the halt in Russian gas deliveries via Ukraine in January, said Wednesday it was preparing a new gas rationing plan for the industry and bracing for possible new cuts.

"We have no reasons to believe that the crisis is inevitable but there is a problem and we are preparing," Economy and Energy Minister Petar Dimitrov told the national radio.

Source: AFP