Europe shivers as gas row cuts supplies

AFP - Gas shortages spread across Europe reaching France and Italy as cuts in Russian supplies through Ukrainian pipelines escalated an increasingly bitter crisis in the depths of winter.

   
With 17 European countries reporting sharp falls or a complete halt in Russian gas shipments Tuesday, the European Union said "the situation is completely unacceptable" and demanded the flow be restored.

In the first sign of compromise, however, gas officials in Moscow and Kiev signalled that they were ready for further talks to resolve the problems. But both sides continued to trade blame publicly for the disruption.

"The Czech EU Presidency and the European Commission demand that gas supplies be restored immediately to the EU and that the two parties resume negotiations at once," they said in a statement.

One after another, European countries announced cuts in their supplies of Russian gas, with Balkan countries the hardest hit but EU heavyweights France, Germany and Italy also suffering reductions.

Russia is the world's largest natural gas producer and provides around one-quarter of the gas used in the European Union, or about 40 percent of the gas the bloc imports.

Russia cut gas supplies to Ukraine on January 1 over a payment dispute. It then accused Ukraine of "stealing" Russian gas meant for customers in Europe.

On Monday, Russian Prime Minister Vladimir Putin ordered an immediate reduction of gas shipped to Europe via Ukraine to compensate for volumes Gazprom said had been illegally siphoned off by Kiev.

Leaders in both Russia and Ukraine had pledged in recent weeks that supplies to Europe would not be disrupted by their dispute and they are now scrambling to paint each other as an unreliable energy partner for the EU.

A growing number of countries reported sudden and sharp supply shortfalls, with nations in southern and eastern Europe who depend most heavily on Russia the hardest hit.

Bulgaria has resorted to rationing supplies to industry, Slovakia declared an energy emergency and most Balkan countries said deliveries of Russian gas had been totally halted.

Austria, Bosnia, Bulgaria, Croatia, the Czech Republic, Germany, Greece, France, Hungary, Italy, Macedonia, Poland, Romania, Serbia, Slovakia, Slovenia and Turkey all reported deep cuts in their gas supplies.

Polish President Lech Kaczynski called on the European Union to play a more active role in settling the gas dispute.

Since the solution to the problem was down to those it affected, "Europe should actively involve itself in the mediation process," he said in a statement posted on his website.

"I am convinced that Europe has a vital interest in playing a more active role in stabilising the situation," he said. "The situation is dramatic in certain European Union countries."

The disruption coincides with a particularly cold snap -- temperatures dropped to minus 25 degrees Celsius (minus 13 Fahrenheit) in Serbia -- and many countries in eastern and central Europe depend on gas for central heating.

Experts said the immediate impact on consumers in Europe would be mitigated by the fact that they had consciously stocked up on reserves after a similar Russia-Ukraine dispute caused shortfalls in 2006.

"We are still a long way from end-user customers having a problem," said Chris Weafer, chief strategist for Moscow-based investment bank UralSib.

In Kiev, the chief executive of Ukraine's state gas firm Naftogaz, Oleg Dubina, said that he would travel to Moscow on Thursday for talks with Russia's energy giant Gazprom, which also said it was ready to negotiate.

Gazprom chief Alexei Miller also said that Russia would hold talks in Brussels Thursday with the European Union and the EU Commmission on the gas crisis.

The EU presidency, represented by the Czech Republic, said it considered all sides were ready to return to the negotiating table.

"The Russian side is ready to take this step. We are also. And I consider, after the talks in Kiev, that the Ukrainian side is also ready," said Czech Industry Minister Martin Riman after a meeting with Gazprom's vice-president Alexander Medvedev in Berlin.

Earlier, Medvedev charged Ukraine with shutting down three of four pipelines that export Russian gas to Europe while Naftogaz accused Gazprom of cutting the volumes of gas it pumps into the system.

Despite the apparently renewed willingness in Moscow and Kiev to negotiate, Ukrainian President Viktor Yushchenko warned the EU that Russia might entirely cut off Russian natural gas supplies to Europe through Ukraine.