Russia threatens to block gas deliveries to Ukraine over debt

Nov 22, 2008, 14:23 GMT

Moscow - Russian energy company Gazprom on Saturday threatened to cut off gas deliveries to Ukraine starting January 1 unless Ukraine pays 2.4 billion dollars of debt and finalizes new contracts for future deliveries.

Gazprom spokesman Sergei Kupriyanov, quoted by the Interfax News Agency, dismissed arguments from Kiev that payments had been delayed due to the ongoing financial crisis.

'If the Ukrainian economy were really in a crisis, they would need less energy from us. There has been no sign of that,' he said, adding that Ukraine cannot expect to receive billion-dollar bail- outs from the International Monetary Fund on the one hand and refuse to pay its debts to Russia on the other.

'We assume the problem will be resolved by the end of the year,' said Kupriyanov. 'Without contracts, Gazprom cannot deliver.'

However, the Russian state company cannot enter into a new contract for future deliveries until all outstanding payments, plus late fees, are paid.

Russia cut off gas shipments to Ukraine three years ago after a political dispute. The cut-off was felt across Europe, since much of the gas western Europe imports from Russia flows through Ukraine. Kupriyanov said the company hopes to avoid 'radical measures like a delivery blockage.'

Moscow has argued that the regular gas disputes with Ukraine only highlight how important it is for Russia and western Europe to build a gas pipeline under the Baltic Sea, bypassing Ukraine.

Ukraine's Prime Minister Yulia Tymoshenko and Russia's Prime Minister Vladimir Putin agreed to settle all debts at a meeting in October. However, this has not yet happened, said Kupriyanov.