Gazprom reopens lines, Ukraine blocks transit to Europe

Russia's Gazprom resumed the flow of gas through Ukraine Tuesday morning, but later accused Kiev of blocking European-bound fuel transiting on its soil. EU monitors in Ukraine said "little or no" gas was getting through to Europe.


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Reuters - Russia started pumping gas destined for Europe through Ukraine on Tuesday for the first time in nearly a week, but the European Union said little or no gas was flowing to countries suffering urgent energy shortages.


Russia's state-controlled gas monopoly, Gazprom, accused Ukraine of siphoning off the gas for its own use. Ukraine blamed a lack of coordination for hampering the flow.


Moscow and Kiev are locked in a contract dispute which has left European countries struggling for gas supplies with winter temperatures below freezing. Their relations deteriorated when Ukraine elected pro-Western leaders in 2004.


Gazprom said Ukraine's actions in the gas row were being orchestrated by the United States.


"We believed yesterday that the door for Russian gas was open but again it's been blocked by the Ukrainians," Gazprom Deputy CEO, Alexander Medvedev, said.


"It looks like... they are dancing to the music which is being orchestrated not in Kiev but outside the country."


Medvedev said he was referring to an agreement signed between Ukraine and the United States.


Ukraine's state energy firm Naftogaz said there had not been enough coordination over the routes chosen for the gas and the volumes shipped to ensure the smooth transit across Ukraine.


"This seriously violates the established practice of reliable functioning of the gas transit system," it said in a statement.


Moscow is still refusing to supply gas for Ukraine itself because of their contract dispute.

Taps opened

A Reuters reporter at Russia's Sudzha pumping station near the border with Ukraine said the gas taps were opened soon after 10:00 a.m. (0700 GMT).


"Gas is now flowing through the first line," said a technician at the pumping station, operated by Gazprom.


But the European Union said "little or no gas" was flowing to Europe and that it was urging both Russia and Ukraine to release as much gas as possible.

"Europe needs the gas urgently," a European Commission spokesman said.


Europe depends on Russia for a quarter of its gas supplies and most of those volumes are shipped though Ukraine, a former Soviet republic whose leaders have angered Moscow by seeking to join the NATO military alliance and the European Union.


The disruption, in which factories shut because of a lack of fuel, has dented the reputation of both Moscow and Kiev as energy sources and prompted a search for new supply routes.


Russia cut off gas to Ukraine itself on Jan. 1 after failing to reach agreement with Kiev on gas fees. A week later it halted transit flows too, saying Ukraine was stealing gas intended for Europe. Kiev accused Moscow of using energy blackmail.


The resumption followed an EU-brokered deal to deploy international monitors to strategic points along the pipeline route to reassure Russia that Ukraine was not taking any of the transit gas for itself.

Energy dependence

Some 18 European countries suffered disruptions to their gas supplies. Eastern Europe and the Balkans bore the brunt of the problems.


Bulgaria said it would ask the European Union to provide 400 million euros ($536 million) in aid to help ease its dependence on Russia, its sole gas supplier, by expanding storage and building pipeline links to Greece and Romania.


Bulgaria, like Slovakia, said it might be forced to restart a nuclear reactor to produce enough electricity.


Analysts say that although Russia says it was not to blame for the disruption, Moscow has suffered damage to its standing in Europe, its most lucrative gas market and biggest trading partner.


Russia's state-controlled VTB bank called it a "Pyrrhic victory for Russia", adding: "Russia's image as a reliable energy supplier is hurt."


Western diplomats say Ukraine's reputation has suffered too, and the economic impact could be even worse.


Gazprom is demanding that Kiev hand over $614 million in unpaid gas bills and pay $450 per 1,000 cubic metres of gas in 2009 -- similar to rates paid by EU customers but a big rise on last year's price of $179.5.


Ukraine is likely to struggle to absorb those costs as its economy -- based on steel and chemical exports -- has been hit hard by the global slowdown and its hryvnia currency has experienced sharp falls.


Ukraine has said it has ample stockpiles of gas but it has restricted supplies to some industrial customers, a measure that could compound economic problems.


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