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Home / World

Europe paying price for Russian gas row

Independent
4 Jan, 2009 03:00 PM2 mins to read

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KEY POINTS:

LONDON - The gas dispute between Russia and Ukraine is causing widespread collateral damage in Europe as supplies have been disrupted to at least seven countries.

With accusations still flying back and forth between Moscow and Kiev, a concerned European Union is to hold crisis talks in
Brussels.

Bulgaria is the latest country to suffer a fall in gas supplies, joining Turkey, Greece, Macedonia, Romania, Hungary and Poland, which also reported drops.

The chief executive of Bulgargaz, Dimitar Gogov, said: "The pipeline pressure has dropped and we are getting smaller deliveries."

Russia supplies more than 90 per cent of the Balkan country's annual gas needs. The EU, which gets a fifth of its gas from pipelines that cross Ukraine, has enough gas stockpiled to manage without Russian supplies for several days, but could face difficulties should problems go on for weeks.

The dispute began on Friday, when Russia's state-controlled gas monopoly, Gazprom, halted supplies to Ukraine, saying Kiev had failed to pay its gas bill and that talks on 2009 prices had broken down.

Gazprom wants Ukraine to pay US$418 ($713) per 1000cu m of gas, but Ukraine says the most it can afford is US$235 - and then only if Gazprom pays more for gas transit.

Gazprom says it already has a gas transit deal to 2010. It also claims that Ukraine owes US$600 million in fines for the late payment of bills of US$1.5 billion.

Ukraine's state energy firm, Naftogaz, says it paid the US$1.5 billion to an intermediary.

The accusations don't end there. Gazprom has said Ukraine was stealing gas destined for Europe, while Ukraine's state-run gas company denied this, and said it had used some of its own gas to keep the pipeline system to Europe operational.

Then Naftogaz accused the gas monopoly of "blackmail". It repeated its denials that it had been stealing gas, and said it had increased gas supplies to Romania and Hungary to make up for a shortfall of Russian transit gas.

The dispute has a wider context. Russia has never been happy with the idea of Ukraine as a separate state, deeply resenting the revolution that brought President Viktor Yushchenko to power, and has been angered by Kiev seeking to join Nato.

- INDEPENDENT

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