EU gets jitters at ‘gas war’ between Russia, Ukraine

Moscow, January 2:

Europe and America have urged a rapid solution to Russia and Ukraine’s new “gas war” last

night amid fears that supplies to European client countries could be affected.

Russia cut deliveries to neighbouring Ukraine early yesterday, the culmination of a long dispute over unpaid bills and prices for this year’s supply. Ukrainian gas officials were swiftly dispatched to Moscow to try to keep negotiations alive after Russia’s Gazprom monopoly reduced pressure in the pipeline network, which also carries about 80 per cent of Russian gas consumed by other countries in Europe.

Negotiations faltered as the two sides searched for a way to resolve to the standoff, which echoes a dispute in January 2006. Gazprom says it is owed more than $2 billion for gas shipped last year, including $600 million in fines which Ukraine says it is not yet prepared to pay. Ukraine says it has paid $1.5 billion for supplies in November and December, but Gazprom said it had not received the money from RosUkrEnergo, an intermediary company.

Russia said it had increased the quantity of gas being pumped into the network — apparently to compensate for that loss — and clients in Europe reported no immediate drop in delivery. However, there were jitters among countries which suffered a drop in supply in 2006, and the new holder of the EU presidency, the Czech Republic, and the White House in the US urged for a “rapid and successful outcome”.