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Gazprom to restore gas supplies to Ukraine

Latest update : 2008-03-06

Ukraine and Russia reached an agreement to lift restrictions on gas deliveries to Ukraine, thereby ending a tense standoff that threatened to put Europe's energy security at risk. (Story: C. Norris-Trent)

Ukraine and Russia have reached an agreement to restore gas supplies in full to Ukraine, averting the risk of cuts in deliveries to western Europe, Ukraine's state gas company Naftogaz said on Wednesday.

"Transit of Russian gas through Ukrainian territory is proceeding in full," a Naftogaz official said. "All restrictions for use by Ukrainian consumers have been lifted."

Russia had cut gas supplies to Ukraine in half on Tuesday over a long-running payment dispute, sparking concern in Brussels and Washington about the security of energy supplies. A quarter of Europe's gas comes from Russia, most of it through Ukraine.

In Moscow, Gazprom spokesman Sergei Kupriyanov confirmed the deal, saying it had been reached after a telephone call between Gazprom chief executive Alexei Miller and his opposite number at Naftogaz.

Ukraine denied throughout the dispute that it had siphoned off any Europe-bound supplies to meet its own needs, as Moscow alleged, saying it maintained all its commitments to the West.

The row mirrored a 2006 pricing dispute between Ukraine and Gazprom, chaired by Russian president-elect Dmitry Medvedev, when Russian gas supplies to Europe were briefly disrupted in the middle of the winter.

The EU and the United States had called on the two sides this time around to find a peaceful solution to the dispute.

"This dispute underscores the need for greater transparency in the Russia-Ukraine gas trade and also highlights again ...that there needs to be a predictable flow of energy for Ukraine and the rest of the European market," State Department deputy spokesman Tom Casey said on Tuesday."

Gazprom reduced supplies to Ukraine by 50 percent on Tuesday -- after starting with a 25 percent cut the day before -- and threatened further cuts unless a debt of $600 million was settled and a 2008 contract signed.

Gazprom said its observers had not registered any disruptions to gas flows coming out of Ukraine, although it takes hours for the fuel to cross Ukraine's territory.

Ukraine rivals

Ukrainian President Viktor Yushchenko, who is on a tour of Central Asia, insisted on Wednesday that Ukraine would not disrupt gas supplies to Europe because it would use stored gas to make up its commitments.

He ordered his prime minister and political rival Yulia Tymoshenko to resume talks with Moscow urgently, criticising her government's conduct of negotiations.

Yushchenko had reached an agremeent with Russian President Vladimir Putin in Moscow in February on the dispute but that that deal appeared to unravel during subsequent talks conducted by Tymoshenko in the Russian capital.

The Ukrainian president and prime minister have been increasingly at odds since Tymoshenko returned to office in December.

"There is a lack of coordination in Ukraine between the Prime Minister and the new president," said Konstantin Batunin, an oil and gas analyst at Alfa Bank in Moscow.

"This won't have any impact on Medvedev in particular. This is just an economic dispute and Medvedev hasn't come into power yet." Medvedev takes power in May.

Tymoshenko said on Wednesday Ukraine would uphold its commitments, although her comments came before those of Gazprom.

"Ukraine is a reliable partner. We will not stray one iota from our obligations in terms of exporting natural gas to European countries," she said.

Date created : 2008-03-05