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Gazprom cuts supplies through Ukraine

Russian Prime Minister Vladimir Putin, left, and Gazprom CEO Alexei Miller, right, shake hands during their meeting in the Novo-Ogaryovo residence outside Moscow, Monday, Jan. 5, 2009. Russia's Gazprom says it will cut the amount of gas it ships to Europe through Ukraine to make up for what it says Ukraine has stolen in recent days from pipelines crossing its territory. Russian Prime Minister Vladimir Putin, left, and Gazprom CEO Alexei Miller, right, shake hands during their meeting in the Novo-Ogaryovo residence outside Moscow, Monday, Jan. 5, 2009. Russia's Gazprom says it will cut the amount of gas it ships to Europe through Ukraine to make up for what it says Ukraine has stolen in recent days from pipelines crossing its territory. (AP Photo/Alexei Druzhinin, Pool)
By Maria Danilova and Lynn Berry
Associated Press Writers / January 5, 2009
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KIEV, Ukraine—Russia's cutoff of natural gas to Ukraine was forcing several European countries to dip into reserves Monday, with Moscow tightening the tap even further.

European Union officials gave assurances Monday that consumers faced no danger for now, even as Hungary, Romania and Bulgaria said that supplies from pipelines through Ukraine remained down, in Romania's case by 30 percent.

Russia's state-controlled gas giant Gazprom stopped supplies to Ukraine on Jan. 1 in a dispute over price and overdue bills and said it would keep pumping gas through Ukraine for European customers.

But Gazprom CEO Alexei Miller said Monday it would cut the amount of gas going into the pipeline by 65.3 million cubic meters, or about 20 percent of what has been the daily supply, accusing Ukraine of having stolen that amount in recent days.

Miller said in a televised meeting with Prime Minister Vladimir Putin that such reductions would continue daily depending on the amount of gas not making it through Ukraine.

"Good, I agree," Putin said. "Start the reductions today."

Ukraine says Gazprom has not been supplying the 25 million cubic meters of "technical gas" needed each day as fuel to send supplies westward, so it has been taking the gas.

Miller said Gazprom would take steps to compensate European consumers, in part by sending more gas through pipelines that cross Belarus and Turkey. He said Gazprom also would increase the amount taken from underground stores in Europe and buy gas on the spot market.

Europe relies on Russia for a quarter of its natural gas and 80 percent of it goes through pipelines that cross Ukraine.

Ukrainian gas company Naftogaz blamed a Gazprom subsidiary for the drop in supplies to the Balkans, saying Moldovagaz was siphoning 10 million cubic meters per day from a branch pipeline as it passed through Moldova. The Moldovan government denied the claim, calling it a "provocation" designed to cover up Ukraine's role. The pipeline carries gas south to Romania and Bulgaria.

The pipeline operator in Bulgaria, which gets 90 percent of its gas from Russia, said Russian supplies have dropped by up to 15 percent and said a loss of 45 percent would leave it unable to compensate from its reserves. In that case, "business may run into trouble," Bulgargaz CEO Dimitar Gogov said.

Bulgaria's Deputy Energy Minister Galina Tosheva said the country's reserves would last for about a month at the current level of consumption.

Hungary, dependent on Russia for about half of its gas, said its supplies were down about 20 percent. Energy Affairs Minister Csaba Molnar said it was "not a significant amount," adding that Hungary would be able to rely on its own reserves if necessary.

Romania, which gets about a third of its gas from Russia, said it had enough reserves, while the Czech Republic said it was covering a 5 percent deficit from reserves and supplies from Norway.

Poland, which reported a 11 percent drop in deliveries through Ukraine, said Gazprom was covering the shortfall in full by sending gas through a separate pipeline that crosses Belarus. Germany, which gets gas through Belarus, said it was receiving its gas in full.

The EU is confident that "there is going to be no problem of supply in the coming weeks for end consumers in Europe," said Ferran Tarradelles, spokesman for the EC energy commissioner.

An EU mission was to arrive Monday evening in Kiev. After meeting with Ukrainian energy and other officials, the mission was to meet later in the week with officials from Gazprom.

During a similar dispute between Ukraine and Russia in 2006, several West European countries saw their gas supplies drop by 30 percent or more. This time Gazprom's customers were better prepared, having built up substantial reserves.

While the previous gas cutoff was seen as punishment for Ukraine's pro-Western policies, this time Gazprom is insisting it is a commercial dispute. Both countries are seeking to prove they are a reliable energy partner for the EU.

Ukraine and Russia blame each other, and no talks are scheduled.

Ukraine has enough supplies to last for weeks. But it says that a continuing cutoff will lead to major delivery disruptions in Europe in less than two weeks.

Gazprom toughened its negotiating stance Sunday, saying it wants to charge Ukraine as much as $450 per 1,000 cubic meters in January, up from its offer before the cutoff of $250, which Kiev turned down. Kiev says that any price hike should be accompanied by a similar increase in the transit fee that Ukraine charges.

Ukraine attempted to crank up pressure on Russia on Monday, saying that Naftogaz may be prohibited from transporting Russian gas at a low transit fee.

Kiev's Commercial Court has ruled to temporarily invalidate a transit contract with Russia on the grounds that the official who signed it in 2006 was not authorized to do so, said Naftogaz spokesman Valentyn Zemlyansky. Court officials were unavailable for comment due to public holidays.

Gazprom said the Kiev court has no right to rule on the transit contract, which was under Swedish law.

------

Lynn Berry reported from Moscow.

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