Ukraine/Russia

Russia halts natural gas supply to Ukraine

Article published on the 2009-01-01 Latest update 2009-01-01 14:48 TU

Gazprom export boss and deputy chairman Alexander Medvedev
(Photo: Reuters)

Following a break-down in negotiatons over a new gas contract between Moscow and Kiev, Russia has cut off its supply to Ukraine, leading to the possibility of disruption in gas deliveries to western Europe.

Talks on renewing the Russia-Ukraine contract went on through the night New Year's Eve, with Moscow putting the blame on Kiev for the failure of negotiations.

Russian Prime Minister Vladimir Putin said Moscow offered a below-the-market price to Ukraine of 179 euros per 1,000 cubic metres, up from the current 128 euros Ukraine has been paying. 

Ukraine said it wanted to restart negotiations, but with a price of 144 euroes in mind.

"We know for sure that the prices of gas for Belarus are way lower than those that Russia would like to charge Ukraine," says Arkady Moshes of the Finnish Institute of Foreign Affairs in Helsinki.

He told RFI that Russia must feel tempted "to exploit the political crisis in Ukraine" to its advantage.

Most European Union countries rely heavily on Russia for their natural gas supplies, with up to one quarter of their gas coming from Russia. The crisis three years ago pointed out Europe's vulnerability. 

The new Czech EU presidency today insisted that Moscow and Kiev honour their commitments to provide natural gas to Europe. Ukraine said Europe will receive all the gas Russia supplies it with. Both Ukraine and Russia's Gazprom European customers further downstream say they have sufficient reserves to last through the winter. 

"Europe understands how important Ukraine is to the energy security of Europe, says Moshes. "The gas reserves have been built both in western Europe and in Ukraine to help both to sustain the short period of cuts.  But also on the political level people now know that Ukraine is important."

Gazprom chief executive Alexei Miller accused pro-western political forces in Ukraine of wanting to ignite a crisis between the two countries. 

Gazprom says Ukraine owes over a billion euros for gas it imported in November and December. Ukraine has transferred just 82 billion euros to an account for payment to Gazprom, without explaining the 100 shortfall.