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Russia Cuts Off Gas to Ukraine in Cost Dispute
MOSCOW, Jan. 1 - Russia cut off the natural gas intended for Ukraine on Sunday as talks over pricing and transit terms unraveled into a bald political conflict that carried consequences for Ukraine's recovering economy and possibly for gas supplies to Western Europe.The dispute comes a year after the Orange Revolution brought a pro-Western government to power in Ukraine. It ends a decade of post-Soviet subsidies in the form of cheap energy that allowed Russia to retain some influence over the former Soviet republics. Choking off the westbound pipes is a striking gamble by Russia, one likely to send political and economic ripples westward in the months ahead. Russia is positioning itself to become an energy-supplying nation capable of easing dependency on Middle Eastern oil in Western Europe and even in the United States. Gazprom, the Russian energy giant, 51 percent of which is owned by the state, provides about a quarter of Western Europe's natural gas. Under a system begun in the Soviet era, 80 percent of Russia's exports to Europe have passed through Ukraine. Gazprom said it had reduced the flow to equal the volumes it agreed to provide to Western countries, minus what the company provides for the Ukrainian domestic market. Sunday's early-winter cut in gas supplies to Ukraine came as an unsettling reminder that promises of energy exports are not Russia's only method of using oil and gas to further its foreign policy goals - it can also turn off the valve of energy exports. Tellingly, President Vladimir V. Putin of Russia was personally involved in the negotiations. It was he, rather than company officials, who made the final offer of a grace period on Saturday. A jump in Russia's utility bill to Ukraine is at the heart of the current conflict. Russia is seeking to charge $220 to $230 per 1,000 cubic meters of natural gas, up from $50. Ukraine's economy has depended on buying cheap energy from Russia, which provides about a third of its natural gas supply. The 11th-hour effort to head off the shutdown failed. On Sunday, Ukraine's natural gas distributing company, Naftogaz, said it had faxed a draft contract to Russia shortly after 11 p.m. Saturday - agreeing to terms laid out earlier that evening by Mr. Putin, the company said in a statement. At around 10 a.m. on Sunday, Gazprom began cutting the pressure on pipelines at the border with Ukraine, and the effect on the Ukrainian web of pipelines was felt later in the day. Gazprom reduced the pressure in the gas mains leading to Ukraine at three metering stations and ceased boosting pressure in the westbound pipelines from a storage system that is designed to keep the pressure up during peak demand in the winter. Posted by: Steve White 2006-01-02 |
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