January 2, 2009 in Nation/World

Russians cut natural gas to Ukraine

Both parties say contract dispute won’t affect Europe
By LYNN BERRY and MARIA DANILOVA Associated Press
 

What’s next

Ukrainian President Viktor Yushchenko said Thursday he expected talks to resume in the next day or two and to be concluded by Orthodox Christmas on Jan. 7.

MOSCOW – Russia made good on its threat to cut off all natural gas supplies to Ukraine on Thursday – but the two uneasy neighbors took great pains to make sure their contract dispute would not leave Europe short of gas just as winter set in.

Overshadowing their confrontation was the specter of 2006, when a similar dispute interrupted gas shipments to many European countries for three days. But both Russia and Ukraine now have strong interests in proving to Europe they can be reliable energy partners, and they assured other European nations they would not be affected.

The cutoff was being monitored by the European Union, which depends on Russia for about a quarter of its gas – with some 80 percent of that delivered through Ukraine.

“I believe we are close to accepting a compromise solution,” Ukrainian President Viktor Yushchenko said in a statement Thursday. He said he expected talks to resume in the next day or two and to be concluded by Orthodox Christmas on Jan. 7.

White House spokesman Gordon Johndroe urged both sides to keep in mind the humanitarian implications of any interruption of gas supply in the winter.

Russia’s gas monopoly Gazprom shut off gas supplies after talks broke down over Ukraine’s payments for past shipments and a new price contract for 2009.

On Thursday, Gazprom said it had boosted natural gas deliveries through other pipelines to Western Europe.

Ukraine’s reputation suffered less in 2006, although it was accused of siphoning off gas intended for Europe. This time, though, Ukraine’s position has appeared weaker, in part because of the failure of its president and prime minister, bitter political rivals, to agree on a common negotiating position.

But early Thursday, Yushchenko and Prime Minister Yulia Tymoshenko issued a joint statement with a new pricing offer. They said Ukraine has enough gas in storage facilities to meet its own needs “for a long time” and stressed that they would guarantee transit of natural gas through Ukraine to Europe.

Since the 2006 crisis, European countries have built up their gas reserves and would be unlikely to see any disruption for several weeks, said Chris Weafer, chief strategist at Uralsib bank.

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