Russia's Gazprom warns Europe of possible gas cuts

[ZingPao]

Saturday December 27, 11:06 am ET

Russia's Gazprom warns Europe about possible gas cuts because of dispute with Ukraine

MOSCOW (AP) -- Russia's state natural gas monopoly OAO Gazprom warned Saturday that a pricing dispute with Ukraine could disrupt gas supplies to Europe.
Ukraine could use the pipeline that crosses its territory to divert Russian natural gas intended for European customers even if it fails to pay its multibillion debt to Gazprom by Jan. 1 and Russia cuts off its supply, said company spokesman Sergei Kupriyanov.

If that happened, the company was "not sure Ukraine could fulfill our transit obligation" of Europe-bound gas supplies, he told The Associated Press.

He said Gazprom could not prevent the "unsanctioned" diversion of gas and Ukrainians would "just ... keep burning gas in their stoves."

Europe gets about a quarter of its gas from Russia, and most of it goes through Ukraine. The warning from Gazprom will likely unnerve European nations who fear a replay of January 2006 supply shortages amid a pricing tug-of-war between Moscow and Kiev.

Ukraine then siphoned Russian gas intended for Europe from a transit pipeline crossing its territory after Gazprom cut supplies.

Kupriyanov said Ukraine might fail to pay off its $2.4 billion debt before Jan. 1, but expressed hope that Gazprom and Kiev will work out "other ways" of settling the dispute.

"We're considering prepayment for transit of gas that goes to Europe," he said. He did not elaborate, saying the details were confidential.

Ukraine is scrambling for the money amid a devastating financial crisis and relentless political turmoil. Ukrainian officials have accused Moscow of trying to exploit the situation to force it to surrender control of its gas transportation network.

Russia's ties with its former Soviet neighbor are badly strained over Ukraine's aspirations to join NATO, and Kremlin leaders were angered by Kiev's staunch support of Georgia in its August war with Russia.

Gazprom's statement follows a stern warning from President Dmitry Medvedev Wednesday that Russia could cut gas supplies to Ukraine. Russia urged European countries to put pressure on Kiev to avoid a repeat of the 2006 gas crisis.

The other transit country for Russian gas to Europe is Belarus, but its transportation network has a limited capacity.

http://biz.yahoo.com/ap/081227/eu_russia_gas.html?.v=4