Gazprom: Yushchenko must help to stop Tuesday gas cut-off to Europe

Business Materials 10 February 2008 14:03 (UTC +04:00)

( dpa ) - The Russian energy giant Gazprom on Sunday called for Ukrainian President Viktor Yushchenko's intervention to prevent the severance of natural gas deliveries to Europe in less than 48 hours.

A telegram from Gazprom Chairman Aleksei Miller to the Ukrainian leader called a ballooning gas payments row between Russia and Ukraine "a critical situation," and asked for Yushchenko's personal assistance in resolving the dispute to avert a potential halt to Gazprom deliveries to European Union consumers.

Gazprom management last week set a Tuesday deadline for resolving the conflict over a 1.5 billion dollar debt owed by Ukraine to Russia for natural gas supplied, and threatened to stop all deliveries, if the Ukrainians failed to pay.

Some 80 per cent of Gazprom's gas exports travel to Europe via pipelines crossing Europe.

The last time Gazprom attempted to cut Ukraine off, in late 2005, the Ukrainians siphoned gas sent onward to the EU, citing the need to charge Gazprom for onward transport of its gas. Retail prices as far away as France spiked as a result.

Volodymyr Ohrysko, Ukraine's Foreign Minister, on Saturday in Berlin promised gas deliveries would continue in full volume.

Ukraine's new pro-Europe government, elected in September, in recent weeks has intensified a campaign to remove a Swiss middleman company between Gazprom and Ukrainian consumers, by switching sales of Gazprom gas delivered to Ukraine from the middleman trading firm to the state-owned energy company Naftohaz-Ukrainy.

The Swiss company, partly-owned by Gazprom, has suffered a massive loss in revenues, building up the debt to the Russian natural gas monopolist.

"We need to buy gas directly (from Gazprom)," said Oleh Dubina, Naftohaz-Ukrainy's chairman, according to an Interfax news agency report.

Gazprom officials last week warned that if Ukrainians continue to stall the company's cash flow as a result of contract disputes with the middleman company, Russia will stop gas deliveries to Ukraine.

In comments made in Kiev, Dubina appeared to raise the ante, saying Naftohaz Ukrainy "has practically no gas in its reserves," contradicting statements by Ukrianian officials on Friday claiming that were Gazprom to cut off gas to Ukraine, Kiev could continue to supply domestic demand.

Dubina's remarks were a veiled threat to Gazprom, making clear that if Gazprom severed gas supplies to Ukraine on Tuesday, Kiev would have no alternative but to siphon Russian gas destined for Europe, observers said.

Gazprom is Russia's largest company. The lion's share of its income comes from natural gas sales to Europe.

Yulia Tymoshenko, Ukraine's new Prime Minister, as part of a hard- line anti-corruption programme has targeted the country's natural gas supply industry for cleaning up.

Removal of the Swiss middleman company currently with monopoly rights to sell Gazprom's natural gas in Ukraine would however require new negotiations between Russia and Ukraine on delivery terms.

Both Yushchenko and Tymoshenko are scheduled to visit the Kremlin this month for high-level talks.