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Kremlin threatens Ukraine with sanctions over unpaid gas bill

Text by FRANCE 24 (with wires)

Latest update : 2008-12-24

Russia has threatened its neighbour Ukraine with sanctions over unpaid gas debts, which it will impose if these are not paid "to the last ruble", according to President Dmitry Medvedev.

Russia could impose sanctions against Ukraine if Kiev does not pay its gas debt to the "last ruble," President Dmitry Medvedev said on Wednesday, Russian news agencies reported.
  
"The money must be paid until the last ruble if they do not want their economy to be hit by demands and sanctions from the Russian Federation," Medvedev was quoted as saying in an end of year television interview.

Earlier, Russian energy giant Gazprom warned it would cut gas deliveries to Ukraine on January 1 if a new contract were not signed for 2009 but pledged to honour its supply obligations to Europe.
  
"If a contract for 2009 is not signed then we are not going to deliver gas without a contract," Gazprom spokesman Sergei Kupriyanov told reporters. "When there is no contract we cannot realise deliveries."
  
"The situation is not simple. It is even critical."
  
Gazprom and Ukraine's state energy firm Naftogaz have for the last weeks failed to agree a solution over the unpaid debts in a conflict that comes amid increasing diplomatic tensions between Moscow and Kiev.
  
According to Kupriyanov, Ukraine owes Gazprom over two billion dollars -- 805 million dollars for November, 862 million dollars for December and 450 million dollars in penalties for late payment.
  
"They finally paid for October. But they are not paying for November and December. This became clear today"  he said
  
"To our frank question if they would pay by the end of the year, we received a frank answer -- 'No'," he said.
  
Ukraine is a major transit country for Russian gas exports to the European Union and a dispute over gas prices led to a brief interruption of gas supplies in several EU countries in January 2006.
  
But Kupriyanov said : "We will deliver the full volume of gas destined for transit and we will fulfill all our obligations towards European consumers."
  
The complexity of negotiations is exacerbated by Gazprom's desire to charge higher prices to Kiev under a new contract, something Ukraine is reluctant to agree amid the global financial crisis.
  
The deadline for signing the new contract is January 1 and Gazprom has said there cannot be a new contract until the debts have been extinguished.
  
Ukraine currently pays Russia 179.5 dollars for 1,000 cubic metres of gas but Gazprom has warned that price could rise to 400 dollars for 1,000 cubic metres from next year.

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Date created : 2008-12-24

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