Ukraine Says Russia Has Cut Off Gas Supplies Meant for Europe

Ukraine’s state oil and gas company Naftohaz Ukrayiny has said that Russia’s Gazprom has cut off a larger volume of gas supplies to Ukraine than it has reported and warned that this amount includes gas destined for Europe. Naftohaz also said that it had agreed late on 31 December to Gazprom’s proposal to preserve the 2005 gas price for the first quarter of 2006 and move to market prices from the second quarter, but this offer was ignored. Gazprom today fulfilled a threat to cut off gas supplies to Ukraine after it refused to accept a fourfold price increase. The following is an excerpt from a report by Ukrainian Ukrayinska Pravda website on 1 January:

Naftohaz Ukrayiny has said that Gazprom has cut gas supplies to Ukraine by 187m cu.m., which are meant to be transported to Europe. Naftohaz said this in a statement today with regard to the restriction of Russian gas supplies.

[Gazprom spokesman Sergey Kupriyanov said today that the volume of gas supplies to Ukraine has been reduced by 120m cu.m. a day - see RTR Russia TV, Moscow, in Russian 1100 gmt 1 Jan 06]

The company says that since 30 December 2005 Gazprom has been systematically breaching the terms of the effective long-term contract “On the volumes and terms of Russian natural gas transit across the territory of Ukraine”.

The Russian company has unilaterally cut supplies through a number of routes along which gas is transited to Europe, the statement said.

“On 31 December 2005, Naftohaz Ukrayiny and Gazprom conducted talks on the terms for provision of services for the transit of Russian gas and payment for them in 2006. The Ukrainian side accepted all the demands of the Russian side that were expressed during the talks,” the company said.

As a result of the talks, the sides agreed that the terms of Russian gas transit and payment for it in the first quarter of 2006 would remain unchanged from 2005.

The draft agreement that envisages a move to market principles of payment for gas starting from the second quarter of 2006 was sent to Russia at 2309 Moscow time [2009 gmt] on 31 December, the press service said.

[Kupriyanov said today that Naftohaz Ukrayiny agreed to Gazprom's proposals only for the first quarter of 2006 - see ITAR-TASS news agency, Moscow, in Russian 1346 gmt 1 Jan 06.]

“Despite this, at 1000 [0800 gmt] on 1 January 2006 gas supply was cut completely at the transfer points of the Valuyky gas distribution station, while supplies at the Sokhranivka and Sudzha gas distribution stations were limited. Volumes of gas that were destined for Europe were also cut,” the statement said.

Naftohaz said the total daily reduction is 187m cu.m. of gas.

“Naftohaz Ukrayiny has said that such actions are inadmissible because they pose a threat to natural gas supplies to Europe,” the statement said.

[Passage omitted: an emergency response centre chaired by the Ukrainian prime minister was set up to deal with the gas situation today]