Tuesday, January 13, 2009

Europe still without gas as quarrel continues


AFP - Russia's natural gas supplies bound for a freezing Europe were halted again on Tuesday only a few hours after a truce in its "gas war" with Ukraine, dashing EU hopes of an end to the crisis.

Gazprom accused Ukraine of blocking the gas, while Ukraine countered that the Russian energy giant had deliberately routed the gas in a way that made it impossible for Ukraine to pump it on to European consumers.

The European Union, which has sent its own experts to the region, expressed "disappointment" that Russian gas flow to Europe through Ukraine was still on hold.

Ukrainian President Viktor Yushchenko said Russia was trying to destabilise his country as energy officials explained they would have to cut internal gas supplies to four regions in order to allow the Russian gas to transit.

The breakdown again infuriated the European Union as hundreds of thousands of people shivered in the depths of winter without gas-fired central heating and factories and schools remained closed for a second week in several countries.

Bulgarian Prime Minister Sergey Stanishev and Slovakian Prime Minister Robert Fico, whose countries have been badly hit by the gas crisis, were expected in Moscow on Wednesday for emergency talks on the gas crisis.

European Commission chief Jose Manuel Barroso expressed the "EU's disappointment" in a phone conversation with Russian Prime Minister Vladimir Putin after the EU reported "little or no gas" reaching Europe from Russia.

"Ukraine has blocked all our actions in respect of renewal of the transit of natural gas, which is unbelievable," Gazprom's deputy chief executive Alexander Medvedev told journalists shortly after Russia announced supply had resumed.

According to Gazprom, foreign observers monitoring the gas flow also confirmed Ukraine's blocking the transit.

"The international monitoring commission's observers in Kiev signed a report which testifies to no pumping of Russian gas through Ukraine's transit pipelines to Europe, while the pressure in the pipeline at the border with Ukraine is 70 atmosphere," Gazprom said in a statement.

But a spokesman for Ukraine's state gas company Naftogaz said the transit route chosen by Gazprom "would have required us to stop supplying gas to eastern part of Ukraine," adding that Gazprom turned down an alternative route.

Ukraine also appealed to Europe to mediate in its dispute with Russia.

Putin took a more conciliatory tone on a visit to Gazprom offices in Moscow, saying there may be structural problems with Ukraine's gas pipeline network, a possibility that the two countries should look into together.

But in Kiev, Yushchenko launched a broadside at Russia, accusing it of "blackmail" against Ukrainians and saying Moscow was trying to use the gas crisis to destabilise eastern Ukraine and take control of its gas network.

"This attack against Ukraine has the goal of provoking a revolt in the eastern regions," a heavily industrialised and pro-Russian part of the country that relies to a large degree on Russian gas supplies, he said.

Yushchenko accused Russia of attacking Ukraine's independence.

Viktor Yanukovych, the leader of Ukraine's powerful pro-Russian opposition Regions Party meanwhile called in parliament for the start of impeachment proceedings against Yushchenko for his actions in the gas crisis.

Later on Tuesday, Gazprom's Medvedev said Russia would maintain pressure in the pipeline system for now "but we won't continue if there's no point," hinting that Russia could cut off supplies again if the standoff continues.

Russia earlier announced it had partially resumed supplies to Europe through Ukraine, with the help of EU mediation in the dispute which erupted on New Year's Day and led to cutoffs across Europe starting last week.

The crisis has had far-reaching effects, setting off alarm bells on Europe's energy security. The EU has sent emergency aid including electric heaters and generators to Moldova -- one of the countries worst affected by the cuts.

Russia said it would initially pump only "test" amounts of gas Tuesday, which would however have been enough to restore full supplies to Bulgaria, Greece, Macedonia, Moldova, Romania and Turkey.

But energy analyst Andrew Neff of US-based IHS Global Insight said there was little chance of the EU getting stable long-term supplies through Ukraine without a resolution of the payment dispute between Moscow and Kiev.

"Until they resolve the bilateral dispute there's zero chance of supplies not being disrupted... If the Europeans want to avoid the gas going off next January they need to stay engaged and push for a longer-term deal," Neff said.

The basic dispute between the two ex-Soviet neighbours involves Ukraine's debts to Russia, fines for late payment, and a new price for gas in 2009.

The EU relies on Russian gas pumped via Ukraine for a fifth of its supplies.

At an emergency meeting on Monday, EU energy ministers concluded that the 27-nation bloc needed to increase investment in energy infrastructure to reduce its dependence on Russia.

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