Russia turns off natural gas supply to Ukraine

The main gas pipeline from Russia goes through Ukraine and carries a share of the natural gas flow to Europe.

Associated Press

The main gas pipeline from Russia goes through Ukraine and carries a share of the natural gas flow to Europe.

MOSCOW — Russia's state-run gas monopoly halted natural gas delivery for Ukraine on Thursday, delivering a New Year's blow that further heightened tensions between Russia and the former Soviet republic.

The dispute could affect not only Ukraine, but much of Europe. About a quarter of Europe's gas is supplied by Russia, and most of it — an estimated 80 percent — goes through Ukraine.

The gas flow to big customers like France, Germany and Italy hasn't been affected, and Russian Prime Minister Vladimir Putin has threatened "serious consequences" for any disruption.

During a similar dispute in 2006, when gas to Ukraine was cut for three days, several European countries experienced shortages.

A similar scenario this year could be especially bad for both Ukraine and Russia.

Given the financial crunch of low oil prices and a plummeting stock market in Moscow, this would be a difficult time for Russia to have problems with its European gas consumers.

A statement from President Bush's Texas ranch issued Thursday called for "restoration of normal deliveries" of gas to the Ukraine and "good-faith negotiations without supply cutoffs."

Gazprom, the world's largest natural gas company, said the supply to Ukraine was cut after the country failed to pay its debts — a point of contention between the two nations and the web of companies used to transit the gas.

Both agree that Ukraine's national energy company, Naftogaz Ukrainy, transferred $1.5-billion to RosUkrEnergo, a Swiss-based trader used by Gazprom. But there is some question whether those funds have gotten to Gazprom.

Gazprom maintains that Ukraine owes at least an additional $500-million in fines; some reports have put the figure at $600-million.

Ukraine President Viktor Yushchenko's office issued a statement Tuesday saying that his country had paid all of its debts."

Russia disagreed, and the gas flow for Ukraine was stopped Thursday morning.

Russia turns off natural gas supply to Ukraine 01/01/09 [Last modified: Wednesday, November 3, 2010 9:02am]

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