Gazprom Cuts Ukraine Gas Deliveries

MOSCOW, Russia -- Gazprom, the natural gas monopoly, began cutting supplies to Ukraine Thursday after negotiations over prices between Russia and Ukraine unraveled, state radio reported.

A gas worker from Ukraine's state gas firm Naftogaz adjusts valves at the Bobrovnytska station in the village of Mryn.

If the interruption continues, customers in Western Europe would likely experience shortages, since the same pipelines in Ukraine that are used for internal distribution are also used for export.

That is a problem that has bedeviled Europe’s energy supplies from Russia for years. About 80 percent of Russia’s gas exports to Europe go through Ukraine.

The transit of Russian natural gas across former Soviet states to customers in Western Europe is a pivotal economic and security interest of the Russian government: taxes on exports of oil and natural gas account for about 60 percent of its budget.

Customers include major European utilities like E.ON of Germany and Eni of Italy.

How quickly Western Europe would feel any shortage of natural gas was unclear, and it would depend on the scale and duration of any Russian energy embargo on Ukraine. The fuel is used for heating and to generate electricity, and winter is the period of peak demand.

In comments broadcast Wednesday evening on Russian state television, Russia’s prime minister, Vladimir V. Putin, said that any interference with Russia’s gas exports to Europe would carry “serious consequences for the transit country itself.” He did not elaborate.

Underlying the gas dispute are long-running tensions between Russia and Ukraine, a former Soviet republic. In 2004, after the street protests known as the Orange Revolution installed a pro-Western government in Ukraine, talks over gas supply and its transit became strained.

In 2006, Russia halted supplies to Ukraine for three days, in an ostensible dispute over pricing and transit fees. A drop in pressure in the integrated European pipeline system led to shortages as far away as Italy, as Ukraine withdrew gas from its export shipments to meet internal demand.

This year, Ukrainian authorities say they have sufficient reserves of gas to meet internal demand for three months.

Moscow’s renewed pressure on Ukraine comes after Russia’s war in August with Georgia, another former Soviet republic, and the Kremlin’s subsequent claim to a renewed sphere of influence in the region. Like Georgia, Ukraine has angered Russia by seeking NATO membership.

Ukraine said it paid $1.5 billion on Tuesday to RosUkrEnergo, the Swiss-based gas trader Gazprom uses to supply Ukraine. President Viktor A. Yushchenko issued a statement saying that Ukraine had settled for all deliveries in 2008. Gazprom maintains that Ukraine must also pay $600 million in late fees.

By Wednesday evening, the sides had not settled on the price for 2009 deliveries or the tariff that Ukraine would charge for shipping Russian natural gas to customers in Western Europe.

However, Ukraine made a late appeal for a return to negotiations, The Associated Press reported. Bohdan I. Sokolovsky, Mr. Yushchenko’s energy adviser, said a note was delivered to a Russian diplomat in Kiev asking Russia not to turn off the gas and expressing hope that an agreement could be reached in the coming days, The A.P. said.

Mr. Putin said that Gazprom is asking Ukraine to pay $250 per 1,000 cubic meters in 2009, up from $179 for the same volume in 2008. He characterized the 2009 fee as a subsidized rate.

Mr. Sokolovsky said Ukraine would not accept that price unless Russia offset the increase by paying Ukraine more to export gas to Europe.

Source: The New York Times