EU demands speedy end to Russia-Ukraine gas spat

The European Union on Tuesday demanded a quick end to the Russia-Ukraine natural gas price dispute that has cut supplies and left thousands of people without heat.

Russian gas company Gazprom confirmed it supplied only 65 million cubic metres to Europe on Tuesday through Ukraine, which Reuters reported was a drop of 78 per cent of the amount shipped before the dispute.

By Tuesday evening, gauges on delivery pipelines to seven countries pointed toward zero and an increasing number of other nations reported significant reductions.

Russian Prime Minister Vladimir Putin ordered Gazprom to continue a 15 per cent cut in daily shipments through Ukraine, which he accused of stealing gas from Western customers.

Bulgaria, Greece, Macedonia, Romania, Croatia, Serbia and Turkey all reported a halt in gas shipments, while France,  Germany, Austria, Poland and Hungary reported substantial drops in supplies from Russia.

In the Bulgarian city of Varna, officials said 12,000 households were without central heating. Government officials say the country has gas reserves to last for a few days.

Serbian officials warned serious power outages could come within days, while Turkey said it is considering alternate supply options, including an offer from Iran.

Germany has enough supplies to last 40 days, while France and Britain say they have several weeks worth of gas reserves. Gas prices rose sharply in London on Tuesday.

The Czech Republic, which holds the rotating EU presidency, said it is considering holding an emergency EU-Russia-Ukraine summit to deal with the dispute.

80% gas through Ukraine pipelines

The European Union called the sudden cut-off to some of its member countries "completely unacceptable" on Tuesday.

In a strongly worded statement, the EU said gas had been cut "without prior warning and in clear contradiction with the reassurances given by the highest Russian and Ukrainian authorities to the European Union."

Earlier, Gazprom officials blamed Ukraine's gas company, Naftogaz, for reductions in supply.

"Responsibility for possible changes in gas transit — and reduction of its supply to European consumers — lies with Naftogaz," said Gazprom officials.

Europe relies on Russia for a quarter of its natural gas, and 80 per cent of it goes through pipelines that cross Ukraine.

There were no reports of face-to-face talks Tuesday between Ukraine and Russia. But the two countries will hold new talks to end their bitter natural gas dispute on Thursday, when Naftogaz head Oleh Dubina will travel to Moscow to meet with Alexei Miller, chief executive of Gazprom.

In the latest round of negotiations between Russia and Ukraine, Gazprom toughened its stance Sunday, saying it wants to charge Ukraine as much as $450 per 1,000 cubic metres in January, up from its offer before the cut-off of $250, which Kiev turned down.

"Our Russian partners are playing cat and mouse with us," said Oleksandr Shlapak, economic adviser to Ukraine's president. "These actions today can lead to serious problems not only for the Ukrainian but also for the European gas transport systems."

Sides blame each other

Russia's latest reductions appear aimed at putting pressure on Ukraine, which is refusing to pay $600 million Gazprom claims it is owed.

Kiev denies allegations it is stealing gas, saying Russia is to blame for the disruption because it refuses to supply the gas needed to run its pipelines, including the compressor stations that pump gas west.

Each side says the other is responsible for supplying the gas to run the pipeline network, but there is no way to sort out the conflicting claims because details of the transit contract are secret.

Ukraine, one of the largest consumers of gas in the world, says it has enough gas reserves to last for weeks.

Some Western analysts have suggested Russia is using the current crisis to weaken Ukraine's government. But Gazprom insists the dispute is purely a commercial matter. Both nations have been hit hard by the global economic slowdown.

Gazprom last cut off supplies to Ukraine and much of Europe in 2006 in a previous dispute. That prompted many Western European countries to build up large strategic reserves of natural gas that could be tapped in the following days if shortages ensue.

Meanwhile, Iran has said it may be able to increase its natural gas supplies to Turkey if a shortfall is created by the cut-off of Russian gas supplies, an Iranian Embassy source told Reuters on Tuesday.

Bulgaria, which gets almost all its gas from Russia, said it would seek the reopening of a nuclear power facility as two cities were left without gas.