another ukraine panic

EPG could jump again

Gazprom-Ukraine rift threatens EU gas supply
By Adrian Blomfield in Kiev
Last Updated: 1:46am BST 04/10/2007



Fears of a new energy crisis in Europe were mounting after Russia threatened to cut gas supplies to Ukraine just two days after an election that could see a pro-Western government formed in Kiev.


Europe receives 80pc of Russian gas imports through pipelines that cross Ukraine


The warning, which brought fresh accusations that Russia was using its natural resources to bully its neighbours, raised the prospect of a repeat of a gas dispute between the two countries last year that led to substantial energy shortfalls in the rest of Europe. The EU Commission called last night for a "swift settlement" to the crisis.

Russia's state-owned energy giant Gazprom denied charges that the Kremlin was seeking to punish Ukraine for an election that looks likely to hand control of parliament to the leaders of the 2004 Orange Revolution.

Claiming that Ukraine had debt arrears of £640 million, Gazprom delivered an ultimatum to President Viktor Yushchenko's government, giving it to the end of the month to pay up.

"If the debt is not settled in October, Gazprom will be forced to begin to cut natural gas supplies to Ukrainian consumers," Gazprom said in a statement. Ukrainian government officials said they were baffled by the threat and denied owing Gazprom anything near the amount it was demanding.

"We don't understand what Gazprom means," said Oleksy Fyodorov, of the Ukrainian state gas company Naftogaz. "We don't understand where this sum has come from."

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In January last year the Kremlin briefly severed supplies to Ukraine, amid a pricing dispute that critics said was motivated by the Kremlin's desire to punish its neighbour for the Orange Revolution.

The row caused panic in the rest of Europe, which receives 80 per cent of Russian gas imports through pipelines that cross Ukraine, as several countries reported major supply disruptions.

Under heavy pressure from the international community, Russia and Ukraine signed a deal - much criticised for its financial opaqueness - but the row did much to damage Moscow's claims to be a reliable purveyor of energy.

Relations between Moscow and Kiev improved after Viktor Yanukovych, the Moscow-backed candidate in the fraudulent presidential elections that triggered the Orange Revolution, returned as prime minister last year.

But, following a snap parliamentary election on Sunday, Mr Yanukovych looks set to lose his job after pro-Western parties were on course to win a razor-thin majority - a result that would give the Orange coalition control of both parliament and the presidency.

Analysts had long warned that an Orange victory could prompt Kremlin retaliation - though few expected it to be so swift. But President Vladimir Putin, who regarded the Orange Revolution as both a personal humiliation and a Western plot to encircle Russia, has been in an increasingly bullish mood of late.

On Monday he announced he would swap the presidency for the premiership after elections next March in a conjuring trick that paid lip service to the Russian constitution. Yesterday it was announced that Canadian and US fighters were scrambled six times this summer after Russian bombers flew close to Alaska.