Price feud cuts flow of gas to 4 countries

The Baltimore Sun


Fuel delivery to four European countries fell below normal yesterday as Russia's state gas monopoly withheld natural gas from neighboring Ukraine for the third consecutive day.

Ukraine warned that its gas pipeline system could experience "serious disruptions" if a worsening price dispute isn't settled in 10 to 15 days, threatening shortfalls across Europe in the heart of winter.

Flows of gas to Poland, Romania, Hungary and Bulgaria, all of which depend on pipelines that cross Ukraine, decreased yesterday, officials said.

Ukraine said it had stored enough natural gas reserves to last for months.

But experts had warned that the abrupt stoppage of gas to Ukraine could cause pressure to dwindle in the pipeline system, creating delivery problems for the rest of Europe. Russia's Gazprom said it increased gas flows bound for the rest of Europe through Belarus and Turkey to counteract any troubles.

The Russian-Ukraine standoff appeared to be worsening as Gazprom and Ukraine bitterly blamed each other for the stalled negotiations and European fuel delivery woes.

Russian President Dmitry Medvedev approved yesterday Gazprom's plan to sue Ukraine for failing to keep proper levels of gas moving through its pipelines to the rest of Europe, the company announced.

Ukraine says Russia is at fault for failing to provide enough gas to keep the pipeline system running smoothly.

The European Union called an emergency meeting for tomorrow to discuss the gas troubles. The bloc has enough reserves on hand to withstand the shortfalls for now.

About one-fifth of the gas delivered to the European Union arrives via pipelines cutting through Ukraine.

Talks between Ukraine and Russia have been stalled since negotiations collapsed on New Year's Eve.

The two countries remain at odds over the price Ukraine should pay for natural gas in 2009, and the amount of transit fees Gazprom will pay Ukraine for allowing Russian gas to pass through the country en route to European customers.

In recent years, feuds over natural gas have become a steady and acrimonious fixture of Russian-Ukrainian relations.

In 2006, a similar dispute drove Russia to cut off gas to Ukraine for the first time, causing fuel interruptions in other parts of Europe and raising sharp concerns about Moscow's reliability as a provider of energy.

Still, Europe remains heavily dependent upon Russian fuel.

Yesterday, Gazprom accused Ukraine of siphoning off 35 million cubic meters of gas a day bound for other European countries.

"It's not us but Ukraine that uses blackmail toward Russia and Europe," the vice chairman of Gazprom's board of directors, Alexander Medvedev, told reporters in the Czech Republic, Interfax reported.

"The impression is that instead of thinking about their own country, they are just playing political games, using the gas crisis for political purposes."

Another Gazprom official suggested that European countries suffering from natural gas delivery interruptions should file lawsuits against Ukraine.

In recent days, the two sides have hardened their stances.

During negotiations on New Year's Eve, Russia had offered to set a natural gas price of $250 per 1,000 cubic meters for Ukraine in 2009. Ukraine balked at the offer, which was significantly lower than the $418 paid on average in Europe but still represented a large increase from the $179.50 Ukraine paid last year.

An angry Gazprom is demanding a price of $418 from Ukraine, where an already struggling economy has been further damaged by the worldwide financial crisis. Ukraine's oil and gas company called the higher price "unprecedented economic pressure."

Russia has taken pains to describe the standoff as a purely commercial quarrel, but it plays out in the context of badly strained relations between the two former Soviet republics.

Ukraine's pro-Western president has enraged Russia, where officials still regard Ukraine as a key constituent in its sphere of influence, by pushing for NATO membership.

Relations were tarnished further by Russia's war with Georgia, which cranked up tensions between Moscow and Washington - and, by extension, Western-leaning governments among the former Soviet states.

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