Russia says slim chance of avoiding gas cut-off

Gazprom officials called on Ukraine's political leaders to intervene in the way Naftogaz was handling the talks.

Russia says slim chance of avoiding gas cut-off
Russia said on Wednesday the chances were receding that a gas deal will be clinched with Ukraine to avoid a threatened Jan. 1 gas cut-off that could disrupt supplies to customers in Europe.

Russia has said it will turn off the taps to Ukraine unless a new contract on gas supplies is signed by the end of Wednesday, alarming European states that receive most of their Russian gas from pipelines crossing Ukraine.

"Frankly speaking, if yesterday we were putting the chances at 50:50, today it is maybe a 70:30 probability of a crisis scenario," Sergei Kuprianov, spokesman for Russian gas export monopoly Gazprom, told a news conference.

Negotiations continued in Moscow between Gazprom and Ukrainian energy executives, but the odds of a last-minute deal lengthened after the Russian firm accused Ukraine of blackmailing Europe over gas transit to Europe.

Ukraine said it guaranteed supplies of Russian gas through its territory to Europe, contradicting Gazprom allegations that Kiev was planning to confiscate fuel bound for Europe if Moscow cuts off supplies destined for Ukraine's own use.

European states are anxious to avoid a repeat of January 2006 when, during a similar row over arrears, Moscow cut off supplies to Ukraine, causing a brief fall in gas pressure for some European consumers.

Gazprom has said if there is no deal, it will turn off the taps to Ukraine at 0700 GMT on Thursday. It says it will do everything it can to maintain European supplies.

Europe depends on Russia for a quarter of its gas supplies. Germany's E.ON and BASF and Italy's ENI are among the biggest customers.


Blackmail allegation 

Gazprom said on Wednesday Ukraine had begun paying the $2 billion Russia has been demanding in arrears for gas supplies -- one of the central issues in their dispute.

But disagreements remained over the price Ukraine would pay for Russian gas in 2009, a major stumbling block to the two sides signing a new contract to replace the current one when it expires at the end of this year.

"In the absence of a contract, we cannot deliver gas to Ukraine, and we will not," Alexander Medvedev, head of Gazprom's export arm, told reporters.

Gazprom officials said they had received a letter from Ukraine's state energy firm Naftogaz stating that if Russia turns off the gas, Ukraine could confiscate Russian fuel bound for Western Europe.

"We cannot describe this position from Ukraine as anything other than blackmail," said Medvedev. "And they are blackmailing Gazprom, Russia and western Europe."

In Kiev, Naftogaz declined to comment on the letter. But President Viktor Yushchenko's First Deputy Chief of Staff, Oleksander Shlapak, said Ukraine guranteed uninterrupted transit of Russian gas to Europe through its territory.


Political intervention

Gazprom officials called on Ukraine's political leaders to intervene in the way Naftogaz was handling the talks.

Earlier on Wednesday there were indications Ukrainian Prime Minister Yulia Tymoshenko was preparing to fly to Moscow for a last minute effort to reach agreement.

But a source close to the Ukrainian government said: "No one knows for certain whether the visit will take place."

Russia denies any political motive behind the row. Relations have been fraught since pro-Western leaders came to power in Kiev in 2004 and started to push for membership of the NATO alliance, angering Moscow.

In previous disputes, Russia accused Ukraine of illegally siphoning off gas that was destined for European customers.

This year Ukraine says it has sufficient gas reserves to ride out the dispute, but it has warned that the fall in pressure in the pipeline system caused by a Gazprom cut-off could have a knock-on effect on deliveries to Europe.

The economies of both Russia and Ukraine are grappling with the effects of the global financial crisis.

Many analysts have said that Ukraine, reeling from a mounting financial crisis that has not been resolved by an International Monetary Fund loan, will struggle to settle its debt to Gazprom and pay higher gas prices next year.

Reuters
Last Mod: 31 Aralık 2008, 16:00
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