Russia Announces Further Natural Gas Reduction To Ukraine

MOSCOW, Russia -- Russian energy giant Gazprom cut gas supplies 35 per cent to Ukraine on Monday over a payment dispute. The Russian natural gas monopolist informed the Ukrainian natural gas distribution company Ukrtranzgaz by telephone that the taps would be turned down 25 per cent as of 0930 GMT.


Gazprom in an afternoon telegramme to Ukraine's government said it was reducing flow another 10 per cent, making the overall volume fall 35 per cent, the Interfax news agency reported.

The delivery reduction to Ukraine potentially could pare down gas supplies to European consumers, as Ukraine in previous conflicts with Gazprom has siphoned off gas destined to Europe for its own needs.

"We are doing this for the protection of our interests," said Gazprom spokesman Sergei Kuprianov at a press conference in Moscow.

The Kremlin-controlled energy conglomerate has argued Ukraine owes as much as 1.5 billion dollars.

Ukrainian officials said the reduction would have no effect on Ukrainians consumers, as gas reserves in country would make up the shortfall.

"Even if (Gazprom makes a full 30 per cent reduction) our consumers will not feel it," said Valentin Zemliansky, spokesman for the Ukrainian gas company Naftohazy Ukrainy. "We as planned will make up the difference from our own reserves."

Gas volumes at two transit points designated by Gazprom for reduced flow registered reduced flow not at the moment of the Gazprom announcment, but by late afternoon, Zemliansky said.

Some 80 per cent of Gazprom gas travels to the European Union via Ukrainian pipelines, providing Europe some 25 per cent of its gas needs.

Gas supplies for Europe were continuing "in full volume," Kuprianov said.

Executives at the Gazprom's downstream wholesale customers Geman Wingas GMBH, Slovakia's SPP, Czech RWE Transgas, and Poland's PGNiG all said Russian gas supplies were continuing at normal volumes, according to a Channel 5 television report.

Gazprom and the Ukrainian government are at odds over an outstanding debt for natural gas used by Kiev from November.

The gas conflict comes in spite of the declaration by presidents Vladimir Putin and Viktor Yushchenko on February 12 that the dispute had been resolved.

Ukrainian Prime Minister Yulia Tymoshenko on Sunday, only hours before the Gazprom volume reduction, claimed the debt had actually been paid in full.

Gazprom on Monday sent Naftohaz Ukrainy "a new proposal of cooperation," Zemliansky said, without making public details of the new offer.

Resolution of the dispute is complicated by a Tymoshenko effort to remove from the payment loop a pair of middleman companies holding distribution rights for delivery of Russian gas to Ukraine.

Tymoshenko has claimed both firms artificially inflate the price of gas sold to Ukraine. Talks between the two firms and the Ukrainian government on payments, particularly over what money has and has not been forwarded to Gazprom, have been bogged down for months.

Kuprianov cited as critical for resumption of supplies a Ukrainian signature of an agreement billing for 1.9 billion cubic metres of Russian gas deliveries worth about 600 million dollars consumed over the last four months.

Tymoshenko last week rejected the terms, arguing Moscow figured out the bill using an artificially high price for Russian gas, when Ukraine in fact was consuming cheaper Central Asian gas delivered by Gazprom.

A late 2005 row between Gazprom and Ukraine over gas pricing led to a 48-hour reduction in gas volumes to Europe, causing retail price spikes as far away as France.

Source: Trend News