Russia cuts off Ukraine’s gas

Gazprom will have to cease making natural gas deliveries through Ukraine since Ukraine has cut off all the gas pipelines transiting it to Europe. This proposal, made by Gazprom CEO Aleksey Miller, was supported by Russian Prime Minister Vladimir Putin at their face-to-face meeting.

“Despite Kiev cutting off the entire transit gas supply to Europe at night, Gazprom had been continuing the supply gas as far as the Ukraine border,” stated the Gazprom CEO. “We continue supplying gas to our European consumers, but Ukraine does not transit it,” stated Putin. When Putin wondered how long this situation was going to last, Miller suggested that Gazprom should immediately cease making gas supplies through Ukraine.

Subsequent negotiations on this issue between Presidents Yushchenko and Medvedev, initiated by the Ukrainian side, brought no results. Medvedev however directed the Ukrainian authorities to sign a new gas supply contract, specifying a market price for the gas, before the supply could be restored. Medvedev also reminded Yushchenko that the Ukrainian state company’s debt to Gazprom had not been completely covered, and would need to be in a very short time. The Russian side will not restore the gas supply unless the Ukrainian side meets its liabilities to Gazprom, but according to both sides agreement will be reached on this aspect of the dispute in a short time.

According to the Russian President the dispute about gas supply to Europe is not political but economic. Russia has not stopped negotiating, Medvedev said, ordering President Yushchenko to give appropriate directions to his Government and energy company. Medvedev also mentioned that European consumers had not received gas they had ordered, transited through Ukraine, due to misappropriation of Russian gas by the Ukrainian side. “This situation does not satisfy the terms of the agreements between Russia and its Ukrainian and European partners,” said Medvedev.

“As Ukraine has stopped transiting Russian gas, and as Ukraine is stealing Russian gas, I propose to cease gas deliveries to the Russian-Ukrainian border”, said Miller. According to him the Russian side has documentary confirmation from international companies that the transit has been stopped. “Gazprom however, will be able to increase gas deliveries to the EU by 10 million cubic metres per 24 hours through pipelines bypassing Ukraine,” Gazprom Deputy Chairman Alexander Medvedev, no relation to the Russian President, said in an interview with Reuters.

Russia will diversify the directions of its gas supply using its underground storage reserves and Belarus pipelines. According to Miller, Gazprom’s gas deliveries to Turkey, made through Blue Stream which lies under the Black Sea, amount to 48 million cubic metres, the pipeline’s maximum pumping capacity.