.EU fears for supply as Russia blocks gas to Ukraine
Russia cut off gas supplies to Ukraine yesterday after last-minute talks about a deal for this year broke down in Moscow.
Although both sides said they would guarantee supplies to western Europe, the cut has again raised fears of gas shortages in the European Union, which relies on Russian gas moved through Ukrainian transit pipelines to meet about 20 per cent of its demand. Russia's action is the latest in an increasingly acrimonious dispute that has dogged Ukraine since 2006.
The US voiced its unease at Russia's action last night, calling on both sides to reach a speedy agreement. The White House said: "We urge both sides to keep in mind the humanitarian implications of any interruption of gas supply in the winter. The predictable flow of energy to Ukraine and the rest of Europe under market-based, transparent conditions is essential for stability and reliability in regional and global energy markets.''
Gazprom, Russia's state gas group, began cutting deliveries to Ukraine at 10am yesterday, saying it was "under no legal obligation to continue" supplies in the absence of a gas deal for 2009. At issue is debt that Ukraine owes Russia, plus a new contract for supplies. Ukraine has offered to pay $201 per 1,000 cubic metres for the gas, but Gazprom has been asking for $250. However, yesterday Alexei Miller, Gazprom chief executive, said it could charge as much as $418.
Ukraine appeared to be seeking a compromise late yesterday when President Viktor Yushchenko said: "Our negotiations with the Russian side should resume in the coming one to two days and be finished by January 7. I think we are close to a compromise."
Bohdan Sokolovsky, Ukraine's presidential energy adviser, told the FT: "We re-ceived an official response several hours ago that the Russian side has agreed to resume negotiations."
Russia accused Ukraine of "unsanctioned" drawing off of gas volumes bound for Europe yesterday, although Ukraine said the small amount was for "technical" reasons and was covered by existing agreements. Gazprom said shipments of gas bound for Europe would continue in full.
Ukraine settled $1.5bn (£1bn) of its Russian gas debts this week, but an additional $450m in fines for late payment is outstanding.
FT
Although both sides said they would guarantee supplies to western Europe, the cut has again raised fears of gas shortages in the European Union, which relies on Russian gas moved through Ukrainian transit pipelines to meet about 20 per cent of its demand. Russia's action is the latest in an increasingly acrimonious dispute that has dogged Ukraine since 2006.
The US voiced its unease at Russia's action last night, calling on both sides to reach a speedy agreement. The White House said: "We urge both sides to keep in mind the humanitarian implications of any interruption of gas supply in the winter. The predictable flow of energy to Ukraine and the rest of Europe under market-based, transparent conditions is essential for stability and reliability in regional and global energy markets.''
Gazprom, Russia's state gas group, began cutting deliveries to Ukraine at 10am yesterday, saying it was "under no legal obligation to continue" supplies in the absence of a gas deal for 2009. At issue is debt that Ukraine owes Russia, plus a new contract for supplies. Ukraine has offered to pay $201 per 1,000 cubic metres for the gas, but Gazprom has been asking for $250. However, yesterday Alexei Miller, Gazprom chief executive, said it could charge as much as $418.
Ukraine appeared to be seeking a compromise late yesterday when President Viktor Yushchenko said: "Our negotiations with the Russian side should resume in the coming one to two days and be finished by January 7. I think we are close to a compromise."
Bohdan Sokolovsky, Ukraine's presidential energy adviser, told the FT: "We re-ceived an official response several hours ago that the Russian side has agreed to resume negotiations."
Russia accused Ukraine of "unsanctioned" drawing off of gas volumes bound for Europe yesterday, although Ukraine said the small amount was for "technical" reasons and was covered by existing agreements. Gazprom said shipments of gas bound for Europe would continue in full.
Ukraine settled $1.5bn (£1bn) of its Russian gas debts this week, but an additional $450m in fines for late payment is outstanding.
FT
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