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Russian gas monopoly halts sales to Ukraine

MOSCOW - Russia's natural gas monopoly halted sales to Ukraine in a price dispute Sunday and began reducing pressure in transmission lines that also carry substantial supplies to western Europe.

Russia's Gazprom provides about half the natural gas used in the European Union, and about 80 percent of that is sent in pipelines that cross Ukraine.

Ukraine's government has said its transit arrangements allow it to siphon off up to 15 percent of gas moving through the country. Russia says that would be outright theft.

Ukrainian officials also say the country has sufficient gas reserves to weather a Gazprom cutoff for at least several weeks but decline to specify how much is in reserve.

There were no immediate reports of gas service being lost to Ukrainian homes or businesses, even as Gazprom spokesman Sergei Kuprianov predicted Ukraine would suffer quick and severe effects. Kuprianov offered assurances on Russian television that "export gas for Europe is moving at full volume."

Ukraine's natural gas company, Naftogaz, acknowledged the reduction by Gazprom.

"Gas is not flowing at all through some transit routes, which can lead to a fall in pressure in all the pipelines and limit the overall supply of gas to Ukraine and Europe," Naftogaz spokesman Eduard Zaniuk said.

However, he said, "for the people and municipal services there will be enough gas."

The dispute is ostensibly centered on Gazprom's desire to move immediately to market pricing and Ukraine's willingness to accept only a phased transition to the kind of prices paid in Western Europe.

Gazprom had given Ukraine a deadline of midnight Saturday to agree to pay quadruple the amount it previously paid for Russian gas, which accounts for about a third of the consumption in the country of 48-million people.

The showdown has underlined the tensions between the two former Soviet republics since Ukrainian President Viktor Yushchenko - a West-leaning leader who wants to reduce Moscow's clout in his country - defeated a Russian-backed rival in a bitter electoral battle a year ago.

The gas crisis comes as Ukraine prepares for parliamentary elections in March, in which Yushchenko's bloc faces a strong challenge from the party of Viktor Yanukovych, who lost the presidential ballot after mass street protests forced a revote.

The Russian Foreign Ministry said Sunday that Ukrainian authorities "consciously decided to ruin the talks process with the Russian side and to use the gas problem almost to create the image of an enemy with the goal of manipulating the internal political situation."

On Saturday, Russian President Vladimir Putin said Ukraine could continue paying the old price of $50 per 1,000 cubic meters for the first quarter of 2006, but only if Ukraine agreed by the end of the day to start paying the new price of $230 in the second quarter.

Yushchenko said late Friday that the most his country could pay now is $80 per 1,000 cubic meters.

Gazprom spokesman Sergei Kuprianov said Ukraine refused the offer, but Naftogaz denied that claim Sunday.

--Information from the Washington Post was used in this report.

[Last modified January 2, 2006, 02:30:25]