Russia - Ukraine Gas Dispute Draws in Europe

Russia halts gas supplies to Europe while blaming The Ukraine for stealing gas from the pipeline. Putin adds fuel with theatrics during TV interview.

According to the BBC, Ukraine's Naftogaz said Russia's Gazprom halted supplies at 0744 local time (0544 GMT). Gazprom said Ukraine had closed the last remaining pipeline. The EU depends on Russia for about a quarter of its total gas supplies, some 80% of which is pumped through Ukraine. Gazprom says Ukraine has been stealing gas destined for Europe. The list of countries reporting a total halt of Russian supplies via Ukraine now includes Romania, the Czech Republic, Slovakia, Bosnia-Hercegovina, Bulgaria, Croatia, Greece, Hungary, Macedonia, Serbia, and Austria. Russian Prime Minister Vladimir Putin said the gas had been stolen

"not from Russia but from western consumers because they have bought this commodity and paid for it".

Valentyn Zemlyansky, spokesman for state gas company Naftogaz, said Russia's gas giant Gazprom completely stopped sending gas to European consumers at 7:44 a.m. (0544 GMT). Eighty percent of Russian gas is shipped via Ukraine.

"Words fail us,

" Zemlyansky said of Gazprom's move. Russia confirmed the cutoff but said it was Ukraine's fault because it had shut down the last pipeline carrying gas from Russia. The Russia-Ukraine natural gas dispute has hit Europe with the force of a winter storm. It has affected at least a dozen nations. Tens of thousands of people were left without heat and governments scrambled to find alternative energy sources. Before Wednesday, Bulgaria, Greece, Macedonia, Romania, Croatia, Serbia and Turkey had all reported a halt in gas shipments, while France, Germany, Austria, Poland and Hungary had reported substantial drops in supplies from Russia. Russia says it has limited supplies to Europe because Ukraine was stealing the gas. Ukraine blames Russia for the shortfalls. Russia stopped all gas shipments to Ukraine on Jan. 1 after the two countries failed to agree on prices and transit fees for next year. Ukraine has continued shipping Russian gas to Europe, but acknowledged diverting some gas used to pump the fuel, saying it was Gazprom's duty to supply it. Gazprom started dramatically reducing supplies to European consumers this week. The cut-off comes after Gazprom and Ukraine's Naftogaz agreed to resume face-to-face talks and the head of Naftogaz said he would fly to Moscow on Thursday. The cut-off also takes place on Orthodox Christmas, celebrated in Russia, Ukraine and a number of other Orthodox Christian countries in Europe. The dispute between Moscow and Kiev has reawakened concerns in Europe about the reliability of Russia as a supplier. The 2006 gas row between the two former Soviet states resulted in a brief cutoff in supplies to Ukraine. When shortages were reported in some Eastern European countries, Russia accused Ukraine of siphoning off Europe-bound gas. Gazprom CEO Alexei Miller told Russian Prime Minister Vladimir Putin Tuesday that talks with European partners on Russian gas deliveries to Europe will be held in Brussels January 8. Miller told Putin that Ukraine steals about 15% of Russian gas.

"The volume of Russian gas being stolen by Ukraine is increasing every hour. According to the latest data, Ukraine steals about 15% of gas fed to the Russia-Ukraine border,"

he said Gazprom demands that Ukraine pay an overdue bill of $600 million and accept a global market price of $418 per thousand cubic meters of gas for 2009. It began reducing pressure in the pipeline on Jan. 1, but cut it sharply on Tuesday in response to what it called systematic Ukrainian "theft" of Russian gas destined for European markets. But in the televised meeting with Putin on Monday, Gazprom chief executive Alexei Miller proposed cutting shipments by 65.3 million cubic meters, accusing Ukraine of stealing that amount in recent days. He suggested similar reductions daily depending on the amount of gas siphoned off by Ukraine. Mr. Putin responded:

"Good, I agree. Cut it today."

So far, the situation is

"commercial" dispute.