Russia cuts off natural gas to Ukraine
The dispute could interrupt fuel supplies to other European countries. The clash over fees and debts reflects the ongoing tension between the two former Soviet neighbors.
Reporting from Moscow — Russia's state gas monopoly halted natural gas exports to Ukraine today in a dispute that could interrupt fuel supplies to other European countries -- and taps into the deep animosity among Russia and its pro-Western neighbors.
Despite weeks of heated negotiations between Gazprom and Ukraine, the two parties were unable to come to terms over Ukraine's unpaid debts, as well as the cost of gas and transit fees in the coming year. Gazprom said that with no contract in place dictating sales for 2009, there were no grounds to continue exporting gas to Ukraine.
Eager to soothe worries about broader gas supply interruptions, Russia increased supplies to other European customers. About one-fifth of the gas bound for the European Union passes through Ukraine, and analysts say that Europe could only do without Russian gas supplies for several days.
In recent days, Russian officials have warned that Ukraine may siphon off other customers' gas. Russian Prime Minister Vladimir V. Putin said Ukraine would face "quite serious consequences" for any supply interruptions to Europe.
Ukrainian officials say the country holds enough gas in reserve to keep domestic supplies stable for months, and they pledged to keep the gas lines flowing to Europe. But experts warned that the stoppage of Ukraine-bound gas could create a pressure drop in the pipeline system, causing transit troubles to other countries.
With concern mounting, the European Union, the U.S. government and the International Energy Agency urged the two parties to resolve their differences to avoid denting gas supply across the continent.
"Commercial disputes ... should be settled by normal dispute resolution mechanisms and in a manner that does not impact on third-party gas customers," the IEA said in a statement.
Each side blamed the other today for the breakdown of negotiations. Gazprom said progress was impossible because the Ukrainian delegation wasn't empowered to sign a new contract. Ukraine, meanwhile, blamed Gazprom for suspending talks.
So far, the talks remain on hold. A delegation from Ukraine's state-run gas company, Naftogaz, was due in Moscow later today for talks with Gazprom.
Gazprom said it had offered to sell Ukraine natural gas at the discounted price of $250 per 1,000 cubic meters in 2009. This would be a steep price hike from the 2008 price of $179.50 but still significantly below European market price.
