Putin Orders Reduction in Gas Sent to Europe Through Ukraine

By Philip P. Pan
Washington Post Foreign Service
Tuesday, January 6, 2009

MOSCOW, Jan. 5 -- Russia said Monday that it is sharply reducing the amount of natural gas it ships to Europe through Ukraine, deepening its fuel embargo of the former Soviet republic as supply disruptions spread to other countries and a top Ukrainian official warned of "catastrophe" for the pipeline system that delivers a fifth of the continent's gas.

Russian Prime Minister Vladimir Putin ordered Gazprom, the state gas monopoly, to cut deliveries using the Ukrainian pipelines by as much as 20 percent, a move the Kremlin presented as retaliation for Ukraine's alleged theft of fuel meant for other countries after Russia stopped sending it supplies five days ago.

In a telephone interview, Bohdan Sokolovsky, the Ukrainian president's representative on energy issues, denied any theft and accused Russia of attempting to strong-arm Ukraine into accepting a crippling price hike. He said the reduction in shipments could cause pressure in the pipelines to fall and trigger a shutdown as soon as next week.

Putin's decision, unveiled in a meeting broadcast on state television, came as Greece, Macedonia, Serbia and the Czech Republic joined Poland, Romania, Hungary and Bulgaria on the list of countries reporting disruptions in gas shipments caused by the politically tinged standoff between Russia and Ukraine's Western-leaning government.

The European Union said it anticipated "no problem in the coming weeks for end consumers in Europe" because of ample reserve supplies, but it sent a mission to Kiev, the Ukrainian capital, and again urged the two sides to resume direct talks, which collapsed Dec. 31.

"I hope that the matter will be resolved," said European Commission President José Manuel Barroso. "If it is not, then it may create problems for European countries who are not responsible for the situation."

Russia halted gas shipments to Ukraine on Jan. 1, saying the country owed more than $600 million in late fees on overdue bills and that it had rejected a new contract raising prices for 2009 closer to what Gazprom charges other countries in Europe. At the same time, Russia pledged to continue pumping gas through Ukrainian pipelines for its other European customers.

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.

"Good, I agree," Putin replied. "Cut it today."

Miller said Gazprom would compensate European customers by sending more gas via Belarus and Turkey, increasing the amount drawn from storage in Europe and buying gas on the spot market while billing Ukraine for the cost. But Gazprom has warned that it doesn't have the capacity to make up the difference entirely.

At issue are about 25 million cubic meters of natural gas that Ukraine says it needs to take from Russian shipments every day to fuel the pumping stations and guarantee delivery of shipments to the rest of Europe.

Russia says that amounts to theft, arguing that Ukraine should be using its own gas to run the pipelines because Gazprom pays for separate delivery under a contract worked out last year. Ukraine says no valid contract exists and has demanded that Russia pay more to use its pipelines.

Sokolovsky, the aide to Ukrainian President Viktor Yushchenko, said Gazprom has been sending gas back and forth between destinations to force Ukraine to expend more fuel in the pumping process, adding that Ukraine has been forced to dip into its reserves to guarantee shipment. He accused the Kremlin of trying to undermine the Ukrainian government and win control of its pipeline system.

"If the prime minister of the Russian Federation is on television speaking about gas, it means gas is not an economic issue to them but a political issue," he said.

While Ukraine has enough gas in reserve to meet domestic needs for months, Sokolovsky said, Russia knows that a reduction in shipments could accelerate a shutdown of the pipelines. "It's not commercial, financial or political. It's a technical deadline for our system" that would lead to "probably a complete shutdown and no gas going west of the Ukrainian border," he said.

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