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Gazprom warns of supply disruptions to Europe

Latest update : 2008-12-27

Russian energy giant Gazprom has warned its European clients that a conflict with Ukraine over unpaid debts could affect deliveries to Europe. Ukraine is a major transit point for Russian gas supplies to the Continent.

AFP - Russian energy giant Gazprom warned European clients Friday that its gas conflict with Ukraine, conduit for European-bound gas from Russia, could affect deliveries to Europe.
   
The warning came in a letter from Gazprom chief Alexei Miller to the company's European clients.
   
"Gazprom is doing everything possible to avoid any disruption of gas deliveries to Europe," said Miller in the letter cited by Interfax news agency.
   
"However, if events develop along an unfavourable scenario, the problem of Ukrainian transit will be a common problem for Russia and Europe," Miller said.
   
Gazprom and Ukraine's state energy firm Naftogaz have for the last weeks failed to agree a solution over unpaid debts in a conflict that comes amid increasing diplomatic tensions between Moscow and Kiev.
   
"We consider that it's our duty to warn (Europe) that we cannot be sure that transit obligations will be respected, seeing that Naftogaz is systematically slowing its contractual obligations," Miller said in his letter.
   
Russian President Dmitry Medvedev told Ukraine on Wednesday to pay its gas debts "to the last ruble" or face the prospect of sanctions from Moscow against its wider economy.
   
His comments came after Gazprom warned Ukraine it would cut gas deliveries on January 1 if a new contract were not signed for 2009 and the debts for 2008 not paid back in full.
   
Gazprom claims it is owed over two billion dollars -- 805 million dollars for November, 862 million dollars for December and 450 million dollars in penalties for late payment.
   
Medvedev did not say what sanctions Russia could use against Ukraine's flagging economy but menacingly warned it had a "whole arsenal of possibilities" at its disposal.
   
"We do not have any aim to cut off (the gas). Our aim is just to get our money," he said in a Russian television interview.
   
"But if Ukraine does not pay we will use a whole arsenal of possibilities and it is completely clear that there can be no illusions there."
   
Earlier Gazprom spokesman Sergei Kupriyanov told reporters that "if a contract for 2009 is not signed then we are not going to deliver gas without a contract."
   
"When there is no contract we cannot realise deliveries. The situation is not simple. It is even critical," he said.
   
While Ukraine paid its October debt, it has not done so for November and December, Kupriyanov 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 settled.
   
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.

Date created : 2008-12-27

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