Ukraine Threatens To Turn Off Gas

KIEV, Ukraine -- Ukraine's prime minister threatened on Wednesday to turn off gas supplies to industry and temporarily halt industrial production in an effort to limit consumption, as Russia increased pressure on Ukraine to stop siphoning gas intended for a freezing Europe.

A Ukrainian man gets into his car in the centre of Kiev. Ukraine is in the grip of extremely cold weather with temperatures in the capital Kiev plunging to about -23 degrees Celsius (-9.4 Fahrenheit).

Prime Minister Yuriy Yekhanurov said such a move, which could cripple Ukraine's already fragile economy, might be necessary to ensure that residential and other consumers are fully supplied if the cold continues.

"The population must receive gas at a full level," Yekhanurov said. If industry "will not hear normal people's voices, we will have to use administrative measures. The government has the tap in its hands."

But, Volodymyr Shandra, minister for industrial politics, dismissed the idea of halting industrial production.

"We are not talking about stopping enterprises," he said, adding that industry might, however, be asked to rely on reserves and energy-saving technology.

Ukraine has been consuming record amounts of gas as temperatures have plunged to minus 25 Celsius (minus 13 Fahreheit).

Russia's state-controlled monopoly OAO Gazprom complained that Ukraine was tapping into transit pipelines pumping gas to Europe, which is also suffering from a cold snap. Russia warned Ukraine on Wednesday that it would be charged for its extra usage and said it was to blame for reported shortfalls in Europe.

"We are increasing gas supplies to the Russian-Ukrainian border on practically a daily basis, but the shortfall in supplies to Europe is increasing daily and correspondingly the removal of gas in Ukraine is increasing," Gazprom's chief Alexei Miller said in televised remarks.

Ukraine's Kommersant newspaper also reported Wednesday that the European Union had called on Ukraine to stop using more than its fair share of gas. Some 80 percent of Gazprom's gas supplies to Europe go through Ukraine.

The Ukrainian government first called for a reduction in consumption on Tuesday, but Gazprom said it hadn't seen any change.

Russia's Industry and Energy Minister Viktor Khristenko called on Ukraine to take urgent action.

"One should not be resolving one's own problems at the expense of neighbors, especially near and dear Poland, which is freezing," Khristenko said, according to Russian news wires.

Ukrainian factory heads insisted that they had already reduced consumption as much as possible.

Andrei Syomich, deputy chief executive at Dniproazot, a large producer of nitrate fertilizers, said the plant had already reduced consumption, but couldn't go much lower.

"We can't run the plant at a much lower rate of capacity utilization without damaging the equipment," he told Dow Jones Newswires. "It's beyond our possibilities."

Ukraine's factories are hugely energy inefficient, as are its power stations, which use 66 percent more gas than in Western Europe to generate the same amount of power. All stations have been working overtime in recent days to cope with the cold.

The dispute between Ukraine and Russia over gas echoes a spat earlier this year over the price of supplies. After Russia temporarily cut supplies to Ukraine, sparking outrage in Europe, the two sides agreed to a complicated, face-saving scheme whereby Ukraine would buy a blend of Russian and Central Asian gas at double the previous price via an intermediary.

Source: AP