| Europe may be affected as Russia readies to cut gas supply to Ukraine |
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MOSCOW: Ukraine and several European countries are facing a gas crisis as Russia readied to carry out its threat to cut off natural gas supplies to its neighbour this weekend after Kiev rejected a proposal for a price increase.
Russia's state-controlled OAO Gazprom had informed the Ukraine government recently that the cost of its natural gas, sent through pipes into Ukraine, will rise 1 January from $50 per 1,000 cubic metres to $230.
Ukraine's president Viktor A. Yushchenko said he is ready to pay more but it cannot afford such a steep hike. He requested Gazprom to continue with negotiations and decide to gradually bring his young nation’s fuel bill in line with those paid by western European countries instead of stopping the supplies.
Gazprom had rejected the offer and it has readied TV crews to film the Sunday stoppage.
Diplomatic sources pointed out that Ukraine can use the gas it has in store to meet immediate requirements and even think of raising the rent it charges Russia for the use of a strategic Black Sea port, the only warm-water port. They point out that Belarus, which toes the Kremlin line, is paying $50 per 1,000 cubic metres of gas.
Europe will be affected because much of its supplies from Gazprom come via the pipelines passing through Ukraine. The European Union, worried of an acute shortage of gas during the winter months as a result of this crisis, has called a meeting of energy officials from member-countries January 4 to discuss the issue. All the central European countries have started readying contingency plans to meet the supply stoppage.
Yushchenko's proposal, sent to Russian president Vladimir Putin, suggested a contract can be signed by 10 January after the negotiations. Pending such talks, it sought a moratorium on the prices.
Gazprom said it does not have any confidence in signing a contract on 10 January. "There is a danger that after having proposed to freeze the price for the first 10 days of January, the Ukrainian side will then want to freeze it for another 10 days," a spokesperson said.
He added that the company will cut off all supplies to Ukraine from 0700 GMT on Sunday unless it agrees to pay the revised rates.
Russia is contending that it is subsidizing Ukraine by supplying gas under outdated terms -- discounting prices with the costs of using Ukraine's pipelines to send gas to European customers. It exports 112 billion cubic metres of natural gas to Europe through Ukrainian pipelines each year. In turn it provides 17 billion cubic metres of gas to Ukraine as territory transit fees.
Nearly a quarter of Europe's gas needs are estimated to come from Russia and almost all of that is sent across the Ukrainian territory.
The background of the rift can be traced to the ascent to power in Ukraine last year of pro-western Yushchenko, who even talks about his country joining the NATO.
Yushchenko has recently announced that Ukraine will buy 40 billion cubic metres of gas next year from Turkmenistan in Central Asia -- at $50 -- as part of the country's plans to diversify energy sources.
Posted
on : Mon, 02 Jan 2006 02:05 GMT | General News
By : Salim Patel
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