Ukraine accuissed of diverting Russian gas

Russia’s state-controlled OAO Gazprom natural gas monopoly today accused Ukraine of diverting about $25m (€21m) worth of Russian gas intended for customers in other European countries, Russian news agencies reported.

Citing Gazprom deputy chairman Alexander Medvedev, Interfax said that Ukraine had siphoned off about 100 million cubic metres yesterday alone. ITAR-Tass said that he put the value of the diverted gas at more than $25m (€21m).

Gazprom has invited the SGS international auditors to record how much gas was entering Ukraine’s pipeline network.

Yesterday, Ukraine denied it was siphoning off gas from the pipelines that cross its country.

Ukrainian Prime Minister Yuriy Yekhanurov said that ”today we are not using a single cubic metre of Russian gas”.

Today, the country’s Fuel and Energy Minister, Ivan Plachkov, repeated the denial, Interfax reported.

“There has been no unauthorised diversion of gas. Ukraine is using its own gas; gas from underground stores and gas from Turkmenistan in strict compliance with the signed contract,” Interfax quoted Mr Plachkov as saying.

Kiev, meanwhile, accused Russia of trying to undermine its economy amid a stand-off over gas prices that has ballooned into a wider energy crisis, with gas supplies heading further west into Europe being curtailed.

Gazprom supplies about one-quarter of the gas consumed in Europe. Most of that goes through pipes that cross Ukraine, and the dispute has raised worries of widespread supply disruptions throughout much of the continent.

Late yesterday, the Ukrainian Foreign Ministry accused Moscow of following “a scenario aimed at economic pressure and blackmail and ultimately at undermining the stability of the Ukrainian economy and foiling Russian gas deliveries to consumers in EU countries”.

It called for a resumption of gas price negotiations, this time including international experts.

In Washington, US State Department spokesman Sean McCormack said in a statement that “such an abrupt stop creates insecurity in the energy sector in the region and raises serious questions about the use of energy to exert political pressure”.

Supply problems to Europe could undermine Western trust in Russia’s natural gas industry, one of the keystones of the country’s economy, and tarnish Russia’s stint as chairman of the Group of Eight, which formally started Sunday.

A Foreign Ministry statement said Russia would “strictly fulfil” its supply commitments to Europe and that “responsibility for any possible... problems for European countries caused by the actions of Kiev will lie with Ukraine”.

The supply restrictions were felt immediately.

In Hungary, which takes Russian gas that has flowed through pipes in Ukraine, major power users were asked to switch to using oil as Russian gas supplies fell by 40%.

“This morning, the situation worsened, gas supply is now reduced by 40%,” said Sandor Kantor, a spokesman for energy wholesaler MOL Rt, adding that that supplies for households were not in danger.

Hungary gets some 80% of its gas supply through pipelines from Russia, which cut through Ukraine.

In Austria, OMV said that natural gas imports from Russia via Ukraine were down by a third over usual levels.

Sixty per cent of Russian gas transiting Ukraine goes through Slovakia, and Slovak state oil company official Alexander Nemudrov told Russia’s Gazprom-owned NTV television on Monday that it was receiving just 60% of the gas it needs to export further West.

The spokesman for the Ukrainian state gas company Naftogaz, Eduard Zaniuk, said today that he could not immediately comment on the drop in supplies to Gazprom’s customers to the West.

He did say that in addition to the gas Gazprom sends to Europe through the Ukrainian network, Ukraine must use its own reserves to add the so-called technical gas needed to complete delivery.

Ukraine’s Emergency Situations Ministry said that domestic gas deliveries on its pipelines had been reduced yesterday, resulting in the “threat of a reduction in the volume of deliveries of natural gas to settlements and industrial enterprises”.

The only gas being put into pipelines headed for Ukraine is intended for European customers, according to Gazprom.

Gazprom has demanded that Ukraine more than quadruple the price it pays for Russian gas, which accounts for about a third of the gas used in the country of 48 million. It argues that its new price of 230 US dollars per 1,000 cubic metres is in line with world market prices; it paid 50 US dollars last year.

Ukrainian officials say such a huge leap would cripple the country’s economy, which relies strongly on energy-intensive heavy industries. Ukraine has not objected to abandoning the cheap price it had been paying, but wants the increase phased in gradually.

Yesterday, Mr Yushchenko denounced Russia for imposing “obvious economic pressure on Ukraine.”

Relations between Russia and Ukraine have been stiff and chilly over the past year, since Mr Yushchenko came to power and vowed to move the country out of Russia’s sphere of influence.

EU Energy Commissioner Andris Piebalgs said last week that Europe could cope with a temporary interruption to its gas supply. EU energy experts will meet on Wednesday to examine the situation.