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Russia-Ukraine Gas Dispute Escalates

BY Admin  January 6, 2009 at 12:45 PM EDT

Ukrainian worker with gas container; AP photo

The European Union has called the sudden cutoff to some of its member countries “completely unacceptable” and has urged Moscow and Kiev to find a solution this week before winter sets in.

The Czech Republic, which holds the EU’s rotating presidency, said it was considering the “extreme option” of an EU-Russia-Ukraine summit.

The head of Ukraine’s gas company Naftogaz said Tuesday that talks on resolving the gas dispute with Russia will resume Thursday, reported the Associated Press.

Russia’s reductions appear aimed at putting pressure on Ukraine, which is refusing to pay $600 million Gazprom claims it is owed. Russia is also demanding an increase in the price Ukraine pays for its gas. Ukraine pays Gazprom less than half of the average price European countries are expected to pay this year.

Russia supplies Europe with about a quarter of its gas, 80 percent of which is shipped through Ukraine. Russia also accuses Ukraine of stealing gas, an allegation Kiev denies.

The conflict between Moscow and Kiev, now in its sixth day, escalated dramatically Monday when Russian Prime Minister Vladimir Putin ordered Gazprom to cut deliveries of gas to Europe via Ukraine by about one sixth — the same amount Moscow accused Kiev of siphoning off.

Ukraine’s gas company Naftogaz said Tuesday that Russia’s Gazprom slashed natural gas shipments to Europe by about two-thirds, while Balkan nations reported a complete shut off of Russian gas.

Bulgaria’s energy ministry said Russian gas supplies to Bulgaria, Turkey, Greece and Macedonia were completely cut off Tuesday morning. Turkey’s Energy Minister Hilmi Guler confirmed the cutoff of gas shipped through the Balkans.

“[S]upplies…to Bulgaria as well as the transit to Turkey, Greece and Macedonia have been suspended,” Bulgaria’s Economy Ministry said in a statement. “We are in a crisis situation.”

Bulgaria is particularly vulnerable to the disruptions because, unlike Greece and Turkey, it has no access to alternative gas supply routes, reported Reuters.

Romania’s gas transport company Transgaz said Gazprom ceased pumping gas into the pipeline in eastern Romania Tuesday morning.

Russia and Ukraine have clashed repeatedly on a range of other issues, particularly the ambition of Ukraine’s pro-Western leaders to join NATO.

During a similar dispute between Ukraine and Russia in 2006, which lasted just three days, several West European countries saw their gas supplies drop by 30 percent or more.

“If there are significant drops in supplies to the European Union, the key question is whether it goes on for a very long time. But it would have to go on for weeks or months for serious problems to arise for Western European customers,” Simon Blakey, European energy analyst, told Reuters.