EU gas supply may be threatened again

EU: UKRAINE WARNED yesterday that a deepening row over gas with Moscow could force it to cut supplies to the European Union, as incoming Russian president Dmitry Medvedev urged Kiev to swiftly resolve the debt dispute.

Kremlin-controlled energy giant Gazprom, of which Mr Medvedev is chairman, threatened to cut gas flow to Ukraine by 50 per cent last night unless the country paid $600 million (€395 million) in allegedly unpaid bills.

Ukraine's state gas firm, Naftogaz, has refused to pay the bill and demands that Russia settle outstanding transit fees for gas pumped across Ukraine to the EU, which receives almost a quarter of its gas through Ukrainian pipelines.

"Naftogaz declares that it can guarantee uninterrupted transit for European consumers until such time as Ukraine's energy security comes under threat," the company said in a statement.

"In the event that Gazprom continues blatantly to violate technical agreements between the two countries by reducing volumes of central Asian gas to Ukraine, Naftogaz reserves the right to introduce appropriate, asymmetrical actions to defend the interests of Ukrainian consumers."

While some Ukrainian officials insisted they would try not to reduce gas supplies to the EU, a Naftogaz spokesman said: "We don't rule that out - Europe must also understand to what extent Ukraine can be bent."

The row echoes a 2006 price dispute during which Gazprom cut Ukraine's gas exports, triggering a ripple effect of shortages across Europe and prompting Brussels to question Russia's reliability as an energy supplier.

Analysts say some senior Ukrainian officials, particularly those close to new prime minister Yulia Tymoshenko, are frustrated by the EU's failure to deal more robustly with Russia on energy issues, and may want to involve the bloc in the current row to strengthen their own hand and cast further doubt on Moscow's trustworthiness as a fuel exporter.

Mr Medvedev, who won Russia's presidential election on Sunday and will enter the Kremlin in May, told Ukrainian president Viktor Yushchenko yesterday that he "expects an intensification of efforts by Kiev to resolve the problem of debts for gas deliveries as soon as possible".

In a phone call, he urged Mr Yushchenko to ensure "timely fulfilment by the Ukrainian side of its commitments" under a preliminary deal that he clinched with Russian president Vladimir Putin last month. Amid a deepening rift between Mr Yushchenko and Ms Tymoshenko, that deal has not been put into practice.

© 2008 The Irish Times

This article appears in the print edition of the Irish Times