Ukraine has suggested it may halt European gas flows if it runs out of its own supplies
KIEV, UKRAINE (MARCH 4, 2008) (REUTERS) - Ukraine hinted it would cut flows of Russian gas to Europe through its pipelines if it ran short of supplies, after Moscow said on Tuesday (March 4) it would halve deliveries to Kiev in a row over payments.
A similar dispute between Moscow and Kiev at the start of 2006 ended up in interruptions of gas to Europe, triggering a political crisis and leading to questions about Russia's reliability as an energy supplier.
Almost a quarter of Europe's gas comes through Ukraine.
Both Ukraine and Russian gas export monopoly Gazprom said deliveries to Europe were running normally for now. But the European Union voiced concern and urged both sides to "quickly find a definitive solution to this commercial issue".
A spokesman for Ukraine's state gas company Naftogaz said it reserved the right to take "appropriate action" if Ukraine's energy security came under threat.
"Naftogaz considers today's statement as unacceptable as it runs counter to the technical conditions of Naftogaz's cooperation with Gazprom. These technical conditions specify that in order for Naftogaz to provide transit of Russian gas to Europe, Gazprom must provide the necessary balance of gas reserves necessary on Ukrainian territory," said Naftogaz spokesman Valentyn Zemlyansky.
"We believe that dragging out these talks with Naftogaz and resorting to ultimatums amount to an attempt to provoke the company to commit a violation of the principles European energy charter which sets down the economic basis as well as the benefits for transit countries. Naftogaz will do everything to ensure uninterrupted transit of gas without incident to European customs regardless of the actions of Gazprom until such time as the energy security of Ukraine and Ukrainians is threatened. If Gazprom continues to resort to pressure, we will make an appropriate and asymmetric response to the prevailing situation," he added.
Gazprom insisted that European consumers would not be affected.
Gazprom chairman Dmitry Medvedev was elected as Russia's next president on Sunday but it was not clear whether he played any role in the decision. Diplomats here say most key Gazprom decisions are taken personally by President Vladimir Putin.
Gazprom blamed Ukraine for the latest cuts, which take effect at 1700 GMT on Tuesday and amount to a further 25 percent reduction from an initial 25 percent cut on Monday. Ukraine will get around 70 million cubic metres of gas a day, 50 percent of the usual amount.
Russia said Kiev owed $600 million in unpaid bills and had not resumed negotiations since it threatened to reduce supplies.
Though all of Gazprom's exports are reaching Europe, Ukraine said the firm had not paid transit fees for gas going to Europe since December, a statement denied by Gazprom.
Ukrainian president Viktor Yushchenko had last month reached an agreement on the gas dispute during talks with Putin but this appears to have unravelled, following a visit by stridently pro-Western Ukrainian prime minister Yulia Tymoshenko to Moscow.
Ukraine's opposition Party of the Regions, which is more pro-Moscow than the government, blamed Tymoshenko's administration for the mess.
