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Russia, Ukraine trade blows over gas crisis

business Updated: Jan 04, 2009 15:36 IST
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Russian energy giant Gazprom on Sunday called on Ukraine to return to negotiations on a gas row that has caused shortfalls in central Europe -- even as Kiev insisted talks were in fact ongoing.

On a European tour intended to win support for Russia in its payment dispute with Ukraine, Alexander Medvedev, Gazprom's deputy chief executive, repeated Moscow's claim that Kiev had been stealing supplies crossing Ukraine bound for the European Union and said Kiev was refusing talks.

"Since December 31 Ukraine has refused to negotiate with Gazprom and has resorted to siphoning off gas intended for European consumers, in violation of its obligations as a country of transit," Medvedev said in a statement issued early on Sunday.

"We call on Ukraine to refrain from these illegal acts and to return to Moscow to negotiate, once and for all, a transaction on gas delivery that will be acceptable to the two sides," he said.

Medvedev accused Ukraine of stealing 35 million cubic metres of Russian gas a day.

Late Saturday in Kiev however the head of Ukrainian state energy company Naftogaz, Oleg Dubina, insisted that contacts with Gazprom were being maintained, albeit by telephone.

"We have not quit negotiations. We are talking over the phone every day," Dubina told journalists.

"I'm ready to fly out to Moscow even now if there are possibilities. If there is a normal approach or normal relations. Today they want to show that Ukraine is illegally taking away gas," said Dubina.

Russia on New Year's Day announced it had cut gas supplies intended for the Ukrainian market due to the two countries' payment dispute but was maintaining supplies to the European Union through Ukraine, the main transit route for European gas supplies to Russia.

Russia has since asserted Ukraine is dipping into the transit supplies to meet its own needs, while Ukraine has denied this, saying it is actually contributing gas from its own stores to maintain pipeline pressure.

On Saturday President Viktor Yushchenko's energy representative, Bogdan Sokolovsky, warned the EU that the bloc could face "serious problems" with Russian gas deliveries transiting its territory.

"If the Russian side does not provide more gas (to EU member states) than at the moment, then in around 10 days there could be very serious technical problems," Sokolovsky said.

"The transit of gas may be disrupted.... It will not be our fault," he said.

On Saturday a handful of eastern European countries reported cuts in Russian gas supplies.

Romania said supplies were 30 percent below the normal level although reserves held in store were adequate to maintain normal supplies to consumers.

Polish pipeline operator Gaz-System said deliveries had dropped 11 percent from 2100 GMT Friday and remained at that level on Saturday, although the shortfall was being made up by supplies via Belarus.

In Bulgaria the head of Bulgargaz said on state radio that deliveries had been cut by between 10 and 15 percent, but added the country had a month's reserves.

Czech Prime Minister Alexander Vondra, whose country holds the EU presidency, urged the sides to resolve the dispute, while insisting there was no reason for concern and adding that the EU was sending specialists to assist.

"There is no reason for being insecure over the future deliveries. There is no reason for concern.

"Russia and Ukraine must (resolve the dispute) quickly. There is no other way to solve the conflict," said Vondra.

Gazprom announced it would file a lawsuit against Ukraine's state gas firm Naftogaz in Stockholm's arbitration court to ensure transit of Russian gas and urged European countries to also apply legal pressure.

Around a quarter of the gas used in the EU -- more than 40 percent of the bloc's imports -- comes from Russia, most of it pumped through Ukraine via a Soviet-built pipeline network.

Russia's cut-off came in response to disagreement between Kiev and Moscow over payment for supplies in November and December and over more than half a billion dollars in fines levied by Gazprom for late payment.

The dispute has also centred on how much Ukraine should pay Russia for gas for 2009.

Russia has insisted Ukraine should move to "market prices" rather than the relatively low prices it has paid since the Soviet collapse, while also offering before the breakdown of talks a lower price as a "humanitarian gesture" in response to economic crisis in Ukraine.