Gazprom threatens to cut gas to Ukraine

Feb 7, 2008, 16:50 GMT

Moscow - Russian gas giant Gazprom threatened Thursday to cut gas supplies to Ukraine that feed on to central Europe if Kiev fails to settle all overdue debts by Monday, news agency Interfax quoted the company as saying.

'Gazprom will end gas supplies to Ukraine if Kiev abuses the February 11 deadline for paying off all overdue debts and fails to conclude a proper contract,' the gas monopoly's spokesman Sergei Kupriyanov said.

The warning echoed a similar threat by Russia in October and revived a longstanding dispute that led Russia to turn off the taps to Ukraine in 2005, a move that caused gas shortfalls across much of the EU.

The row in October over 1.3 billion dollars of debt reclaimed by Gazprom was only settled following emergency talks between top- ranking politicians from both countries in Moscow.

Gazprom accuses Ukraine of siphoning off supplies destined for other consumers.

'Non-formalized consumption of the Russian gas continues, and as consequence, the debt grows,' Kupriyanov said.

He put the size of the back-payments owed since January at 500 million dollars, adding that the total of Ukraine's debt to Gazprom topped 1.5 million dollars.

Past gas disputes between the countries have almost always hinged on a difference of opinion on how much Kiev actually owes.

Gazprom's transports 80 per cent of Russia's gas supplies to western Europe.

During a late 2005 gas pricing dispute between the Kremlin and Kiev, Russia closed the gas taps to Ukraine and the Ukrainians - arguing they were just taking payment for shipping Gazprom's product westward - retaliated by siphoning fuel meant for Europe.

The two former Soviet republics resolved the conflict in less than a week, but not before the short supply interruption spiked retail gas prices as far away as France.