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Russian Monopoly Cuts Off Natural Gas Sales to Ukraine

Posted on: Wednesday, 4 January 2006, 18:00 CST

By JIM HEINTZ, Associated Press writer

MOSCOW Russia's natural gas monopoly halted sales to Ukraine in a price dispute Sunday and began reducing pressure in transmission lines that also carry substantial supplies to Western Europe.

Ukraine's natural gas company Naftogaz acknowledged the reduction by Russia's Gazprom.

"Gas is not flowing at all through some transit routes, which can lead to a fall in pressure in all the pipelines and limit the overall supply of gas to Ukraine and Europe," Naftogaz spokesman Eduard Zaniuk said.

However, he said, "for the people and municipal services there will be enough gas."

Gazprom had given Ukraine a deadline of midnight Saturday to agree to pay quadruple the amount it previously paid for Russian gas, which accounts for about a third of the consumption in the country of 48 million people. Gazprom supplies about one-quarter of the gas consumed in Europe.

Most of that goes through pipes that cross Ukraine and the dispute has raised worries of widespread supply disruptions throughout much of the continent.

On Saturday, Russian President Vladimir Putin said Ukraine could continue paying the old price of $50 per 1,000 cubic meters for the first quarter of 2006, but only if Ukraine agreed by the end of the day to start paying the new price of $230 in the second quarter.

Gazprom said Ukraine refused the offer, but Naftogaz denied that claim Sunday.

Gazprom has said the price increase is necessary to conform to world gas price levels.

Ukraine has not objected to a market price but wants the increase to be phased in. Its president said late Friday that the most his country could pay now is $80 per 1,000 cubic meters.

Source: Columbian

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