Duh ... No!: Gas row spreads as supplies to Europe fall

‼ Russian natural gas exports to Europe fell sharply on Tuesday after Gazprom cut supplies to transit pipelines crossing Ukraine in a sharp escalation of the gas conflict between the two countries.

From Financial Times:

By Isabel Gorst in Moscow, Roman Olearchyk in Kiev, Delphine Strauss in Ankara and Chris Bryant in Berlin
Published: January 6 2009 10:45 | Last updated: January 6 2009 12:59
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Gas consumers in eastern Europe were hit overnight by the cutback, but by morning the impact was spreading further west towards Gazprom’s biggest European buyers.
Naftogaz, the Ukrainian state gas company, said shortages via its gas pipeline had hit countries further west and south because Gazprom had cut gas deliveries bound for Europe threefold.
But Gazprom blamed Ukraine for the cut-off, saying Naftogaz had refused to provide technical protocols for gas transit and sent gas pipeline dispatchers home late on Monday.
Alexander Medvedev, deputy chief executive of Gazprom, said the company “was being held hostage by Ukraine”.
Ukraine did not cut gas supplies to Europe, Ukraine’s ambassador to Turkey Sergei Korsunsky insisted on Tuesday. Mr Korsunsky also told reporters Ukraine had enough gas in storage to meet its needs until April and that the country had forwarded a new offer to begin negotiations again with Gazprom
Bulgaria and Turkey said gas supplies through a pipeline running south from Ukraine halted altogether on Monday night.
Bulgaria, which is 100 per cent dependent on Russian gas, instructed industrial gas users to switch to alternative fuels and urged households to use other forms of heating.
Hilmi Guler, Turkey’s energy minister, said Turkey had increased Russian gas imports through a pipeline across the Black Sea although extra supplies were insufficient to compensate for the shortfall through the pipeline from Ukraine.
Romania said Russian gas supplies had fallen by 75 per cent below contract levels on Tuesday, accelerating a decline that began late last week.
Germany and the European Union are set to pile pressure on Gazprom to find a swift solution to the dispute later on Tuesday when Mr Medvedev meets officials in Berlin.
Brussels on Tuesday called for the immediate resumption of gas supplies to Europe and urged the two sides to resume talks immediately. ”Without prior warning and in clear contradiction with the reassurances given by the highest Russian and Ukrainian authorities to the European Union, gas supplies to some EU member states have beensubstantially cut,” the EU said in a statement.
”Gazprom must meet all its contractual obligations – this also applies to deliveries to other EU states,” Michael Glos, economics minister, told the Frankfurter Allgemeine newspaper prior to the meetings. He urged the two sides to resume talks ”immediately”. Germany relies on Russia for around 40 per cent of its natural gas imports.
”At stake is nothing less than Russia’s reputation as a reliable supplier and Ukraine’s reputation as a secure transit country,” Mr Glos said.
German gas importers have so far reported few difficulties obtaining Russian gas deliveries but the problem is rapidly nearing the borders of Europe’s biggest economy. Austria on Tuesday said Russian supplies had fallen to just 10 per cent of their normal levels.
Vladimir Putin, Russia’s prime minister, on Monday ordered Gazprom to cut supplies to Ukraine, hours after Kiev took steps to annul a long-term contract signed with Russia in 2006 governing the transit of gas to Europe.
Gazprom urged Ukraine to return to gas talks that broke down on December 31st after the two sides failed to agree on gas pricing and transit terms for 2009.
Vadim Karasyov, a political advisor to Ukraine’s president Viktor Yushchenko, said the dispute had gone so far that it was ”less clear what agreement could be reached and what the losses and gains would be for each side.”
Copyright The Financial Times Limited 2009