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Russia, Ukraine in natural gas war

Wed., March 5, 2008

MOSCOW – A new natural gas war brewing between Russia and Ukraine threatened to reduce gas supplies to Western Europe on Tuesday, triggering fears among EU countries of a repeat of the politically charged shutdown of gas supplies in 2006.

Russia’s state-owned natural gas monopoly, Gazprom, has cut back its natural gas supplies to Ukraine by half, contending that Ukraine has failed to pay as much as $600 million in debt to Gazprom.

In return, Naftogaz, Ukraine’s natural gas company, threatened to divert for Ukraine’s use natural gas that Russia sends to Western Europe. Much of the gas Russia delivers to Europe travels through pipelines on Ukrainian territory.

Gazprom has portrayed the dispute as strictly commercial in nature. Last month, Russian President Vladimir Putin and Ukrainian President Viktor Yushchenko averted a gas cutoff by reaching a last-minute agreement on settling debt owed by Ukraine to Gazprom.

Gazprom went ahead with a further 25 percent reduction in gas supplies Tuesday evening because Naftogaz has yet to sign the documents needed to formalize the pact.

Russia’s actions have raised concerns, especially in Europe, that the Kremlin will again use energy as political leverage against Ukraine, now a U.S. ally that is angling for membership in NATO.

In January 2006 in the midst of a row with Ukraine over natural gas prices, Russia shut down gas to Ukraine and as a result disrupted gas supplies to several European Union countries farther along the pipeline.

The dispute was resolved days later, but Moscow’s decision to shut down gas to one of its neighbors in the middle of winter created strong concerns in Europe and Washington about Russia’s use of energy resources as a political tool against other governments.

Russia already supplies Europe with a quarter of its natural gas, and that dependence is expected to grow in coming years.

Naftogaz officials said Russia’s gas cutoffs forced its company to consider diverting for Ukraine’s use Russian gas supplies meant for Europe and traveling through Ukrainian pipelines. Naftogaz, said company spokesman Dmytro Marunich, “reserves the right to resort to adequate and symmetrical measures to defend the interests of its consumers.”

Ukrainian Foreign Minister Volodymyr Ohryzko, however, tried to allay fears in Europe of another gas war, saying Ukraine would do “all it can to guarantee normal gas shipments to the EU.”


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