Russia-Ukraine gas row to leave Europe in cold

01 June 2009

The gas dispute between Russia and Ukraine could threaten cutting off gas supplies to Europe once again in the coming winter.

Russian prime minister Vladimir Putin said that Moscow is unlikely to fund Ukraine $5 billion as advance payment for the transmission of gas to Europe over the next 5-7 years as proposed by the Ukranian prime minister Yulia Timoshenko, and warned that the issue could lead to rising risks of disruption of gas supplies this winter.
 
"Talks have indicated that there may be problems with fulfilling these financial commitments. As a consequence, there appears a risk of new disruptions in Russian gas transits to European consumers," Putin said.

Putin referred to the stand  adopted by Ukranian president Viktor Yushchenko's on the issue, who refused to endorse the scheme and the EU-Ukraine accord in March to renovate Ukraine's gas transportation system, saying that Gazprom – Russia's gas behemoth – is not sure with whom it has to deal with on gas transit in the future. He also mentioned the global financial crisis and the drop in gas prices.
 
About one-fifth of Europe's gas comes from Russia, 80 per cent of which is transited through Ukraine. A stand-off between the two countries in January disrupted gas supplies to Europe for about a fortnight in peak winter. (See: Putin cuts European gas supplies via Ukraine)

Putin had called on the European Union to set up a financing group to assist Ukraine to pay for the gas supplies from Russia.

The Russian premier said that he had discussed gas supplies via Ukraine with the European Commission (EC) president Jose Manuel Barroso and judging by the response, he felt that the European Union (EU) is unable to provide proper financial help to Ukraine.

"They cited the acute economic crisis and internal regulations and procedures," Putin said.