Russia cuts off Ukraine gas

2006-01-01 11:56

Moscow - Russia began lowering the pressure of natural gas entering Ukraine's pipeline system, a spokesperson for the Gazprom energy company said on Sunday, assuring supplies to the rest of Europe were not at risk.

"We have been forced to start the operation to lower the pressure in Ukraine's gas pipeline system," state-controlled Gazprom's spokesperson Sergei Kupriyanov told AFP after a deadline expired for Kiev to agree to a steep gas price increase as from April.

Russia and Ukraine have been locked in a bitter gas price dispute for months, sparking concerns in European Union states that depend heavily on Russian energy supplies.

"Export gas will be delivered in its totality," Kupriyanov continued, referring to deliveries to the rest of Europe.

"We were ready to come to an agreement with the Ukrainian people... Our offer was rejected," Kupriyanov said.

Around a fifth of Europe's gas supply comes from Russia via Ukraine and is carried into Ukraine by a single main trunk pipeline from Russia that then branches off into the country's pipeline network and European routes further west.

Ukrainian Prime Minister Yury Yekhanurov said last week that if Moscow stopped supplying Kiev then his country of 48 million people would have the right to take 15% of the gas transiting through its territory to western Europe.

There was no immediate official comment from the Ukrainian government after Gazprom's announcement of the pressure reduction.

Kiev has so far been paying $50 per 1 000 cubic metres of natural gas from Russia.

Gazprom, which controls a third of the world's natural gas reserves, wants $230 (€195), arguing that Soviet-era tariffs no longer apply and the price needs to be aligned with market rates.

Kiev has said it can pay more over a transitional period but Gazprom said it would shut down Ukraine's gas supply from January 1 unless Kiev agreed to the higher price immediately.

Last-minute diplomatic moves by Russian President Vladimir Putin and Ukrainian President Viktor Yushchenko failed to prevent the stoppage.

Putin offered to maintain gas supplies at the current price until April but only on condition that a deal be struck by a midnight deadline on New Year and that Ukraine agree to a more than four-fold price increase thereafter.

Gazprom said Ukraine rejected the deal, though Ukrainian officials said on Saturday that they were "surprised" by the announcement and that Russia had agreed Ukraine could pay $50 for the first quarter of 2006.

Ukraine depends on Russia for around a third of its natural gas supplies, importing some 25 billion cubic metres per year, and many ordinary Ukrainians have expressed alarm despite official assurances that the country has enough reserves to last the winter.

- AFP