Ukraine-Russia gas dispute could threaten supplies

UKRAINIAN OFFICIALS are heading to Moscow for urgent talks to defuse a Russian threat to cut gas supplies over a debt dispute, a move which could jeopardise midwinter fuel flows to the European Union.

Kremlin-controlled energy firm Gazprom says it will not supply Ukraine with gas beyond the end of this year unless a new contract is signed, and that a new deal cannot be reached until Kiev pays an outstanding bill of $2.4 billion (€1.8 billion).

Ukraine's state energy firm Naftogaz insisted that it owes Gazprom nothing, but acknowledged $1.27 billion arrears to a shadowy firm that handles gas trade between Russia and Ukraine.

The row has rekindled memories of January 2006, when Gazprom shut off gas supply to Ukraine during a dispute over prices. It caused a dramatic drop in fuel flows to several countries further west, which receive their Russian gas through pipelines that cross Ukraine.

A government statement yesterday said: "At the request of prime minister Yulia Tymoshenko, a delegation from Naftogaz is leaving urgently for Russia to resolve the situation concerning arrears and to take further decisions."

Ms Tymoshenko later insisted that Ukraine would ensure the free flow of gas to its neighbours and requested "a small delay in payment of a few months", for gas in storage and not yet consumed.

"This would be until we start using and consumers start paying for the gas now in storage. I think we will achieve a mutual understanding on this."

Western politicians have accused Moscow of using its energy riches to exert political pressure on its neighbours. The Kremlin is at loggerheads with Ukraine over its bid to join Nato, its support for Georgia during its recent war with Russia and Kiev's request that the Russian navy prepare to leave a strategic Black Sea base.