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EU Feels Impact Of Russia-Ukraine Gas Dispute

Last updated at: 03.01.2009 15:30

(RFE/RL) -- The EU is feeling the impact of the Russian-Ukrainian gas dispute.

The most affected EU state so far is Romania. Bucharest reports today that natural gas deliveries via Ukrainian pipelines are down 33 percent from normal levels.

Hungary, too, has seen a drop. Deliveries there are down 25 percent. In Poland, deliveries are down 11 percent, while Bulgaria has also reported a decrease in gas supplies via Ukraine.

All these countries say they have large stockpiles of gas, or can increase the imports they receive via Belarus, so ordinary people will not immediately suffer from the shortfalls.

But the drop in gas pressure, which began on January 2, is highly alarming for the EU. It means the Russian-Ukraine gas dispute is again spilling across borders into their countries, despite earlier assurances from both Moscow and Kyiv they would not be impacted.

Moscow places the blame on Kyiv, accusing Ukraine's state-owned Naftohaz company of siphoning off gas intended for Europe to compensate for Russia's refusal to sell gas to Kyiv. "Naftohaz officials have officially and publicly stated that they are diverting 21 million cubic meters of transit gas,” Gazprom spokesman Sergei Kupriyanov said on January 2. “The Ukrainian side therefore openly admits to stealing gas and doesn't feel shy about it."

Massive Price Hikes

On New Year's Day, Russia reduced the amount of gas it sends through Ukrainian pipelines to only the amount intended for Europe. It said it was doing so because Kyiv refused to agree to pay higher gas prices in 2009 more in line with world market prices.

But Kyiv says the price Moscow wants is more than double what Ukraine paid last year.

Gazprom chief executive Alexei Miller now says Ukraine must pay a "European price" of $418 per 1,000 cubic meters, compared to $180 before. That comes after Kyiv earlier rejected a Russian demand for a new price of $250.

In Prague on January 3, Gazprom deputy chief Aleksander Medvedev said negotiations cannot resume because there has been no relevant response from the Ukrainian side. He called on the EU to "punish" Ukraine for the drop in gas to Europe, and said he would "meet with the Czech representative in charge of the EU to give a picture of what is going on."

Meanwhile, Ukraine says Russia should pay more to ship gas through its pipelines, which carry 80 percent of the gas that the EU gets from Russia.

Ukraine's state Naftohaz company concedes it is now siphoning gas from the pipeline, but denies it is stealing. Officials say Russia's reduction of the gas flow in the pipelines to just the EU's share has left Ukraine without gas to run the pipelines' own pumping stations. Naftohaz says it is Russia's duty to supply this "technical gas."

Valentyn Zemlyansky, the company spokesman, told RFE/RL's Ukraine Service on January 2 that Kyiv is acting responsibly. "Ukraine is fulfilling all its duties to European consumers and to Gazprom. There are no problems as of today,” he said. “According to the operational data, from 4 p.m., January 1, to 4 p.m., January 2, Ukraine has additionally used 17 million cubic meters of gas from its own resources and sent it to European consumers. Out of this, 10 million [cubic meters] went to the West and 7 million were used to support the [gas transit] system."

Ukrainian President Viktor Yushchenko's representative on energy security, Bogdan Sokolovsky, warned in Kyiv that "if the Russian side does not provide more gas than at the moment, then in around 10 days there could be very serious technical problems."

Tapping Stockpiles

Where the dispute goes from here is hard to predict. Ukraine, like the EU states, says it has previously stockpiled enough gas that its populace will not immediately suffer from the Russian cut-off.

Naftohaz chairman Oleh Dubina on January 2 said Ukraine has enough gas in its own reservoirs to go 45 days without Russian imports. He said if the company also taps Ukrainian reservoirs contracted by Moscow, the country could go as long as four months.

If so, that reduces pressure on both Kyiv and Moscow to come to a quick compromise.

The current gas crisis is now beginning to look very much like a replay of the gas crisis in 2006, when a Russian cut-off on New Year's Day also produced noticeable drops in supplies to Europe. But that crisis was short. By January 4, 2006, Moscow and Kyiv struck a new price deal.

The EU can only hope that this new crisis ends as quickly.

"Energy relations between the EU and its neighbors should be based on reliability and predictability," the EU's Czech presidency said on January 2.

So far, the EU has been reluctant to become directly involved in the gas dispute, despite calls from Kyiv for the EU to mediate.

Both Ukraine and Russia have sent delegations to tour the EU to win support in the gas crisis.

Gazprom deputy chief executive Medvedev said in London on January 2 that the crisis gives new urgency to Russian plans to build pipelines to the EU that bypass Ukraine.

Gazprom currently has two new pipelines under construction. One, Nord Stream, is to cross the Baltic Sea to Germany. The other, South Stream, is to cross the Black Sea to Bulgaria.

The EU relies on Russia for about a quarter of its natural gas, with some countries, such as Austria, almost entirely dependent on Russian supplies.

RFE/RL's Ukraine Service contributed to this report.

Source: http://www.rferl.org/content/EU_Feels_Impact_Of_Russia_Ukraine_Gas_Dispute/1366022.html

Copyright (c) 2009. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.

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