Russia has stopped all gas supplies to Ukraine after the collapse of talks to end a row over unpaid bills and prices. Russia's gas giant Gazprom said it turned off the taps at 0700 GMT, when its contract to supply Ukraine ended. Ukraine insists it has paid off its debts to Gazprom, but Russia contests this. The two countries have also failed to agree on a price for 2009. The EU urged Russia and Ukraine to resume negotiations and not to let the dispute disrupt supplies to Europe.
Russia has stopped all gas supplies to Ukraine after the collapse of talks to end a row over unpaid bills and prices.
Russia's gas giant Gazprom said it turned off the taps at 0700 GMT, when its contract to supply Ukraine ended.
Ukraine insists it has paid off its debts to Gazprom, but Russia contests this. The two countries have also failed to agree on a price for 2009.
The EU urged Russia and Ukraine to resume negotiations and not to let the dispute disrupt supplies to Europe.
Jan. 1 (Bloomberg) -- Russia prepared to resume talks with Ukraine in their dispute over the price of natural gas after cutting supplies to its western neighbor for the second time in three years, threatening fuel shipments to Europe. Ukrainian President Viktor Yushchenko said in a statement the two sides are near a compromise, urging state utility NAK Naftogaz Ukrainy and OAO Gazprom, Russia's gas exporter, to meet again in the next one or two days. Gazprom also proposed talks. The repeat of an energy standoff between the former Soviet neighbors risks further souring Russia's ties with the West, months after its war with U.S. ally Georgia. Russia, which supplies a quarter of Europe's gas, mostly through Ukraine, cut Ukrainian deliveries in January 2006 amid a similar dispute. That shutdown reduced gas flows to Europe and led to questions over both countries' reliability as energy suppliers.
Jan. 1 (Bloomberg) -- Russia prepared to resume talks with Ukraine in their dispute over the price of natural gas after cutting supplies to its western neighbor for the second time in three years, threatening fuel shipments to Europe.
Ukrainian President Viktor Yushchenko said in a statement the two sides are near a compromise, urging state utility NAK Naftogaz Ukrainy and OAO Gazprom, Russia's gas exporter, to meet again in the next one or two days. Gazprom also proposed talks.
The repeat of an energy standoff between the former Soviet neighbors risks further souring Russia's ties with the West, months after its war with U.S. ally Georgia. Russia, which supplies a quarter of Europe's gas, mostly through Ukraine, cut Ukrainian deliveries in January 2006 amid a similar dispute. That shutdown reduced gas flows to Europe and led to questions over both countries' reliability as energy suppliers.
Gazprom protests too much. The gas trade is so opaque that it is difficult to say where the dividing lines lie between politics, commerce and the personal interests of those running the business in central Asia, Russia and Ukraine. But it is clear that in this high-stakes game, Russia holds the top cards. So it is fair to assume that if Russia really wanted to take politics out of the trade it would do so.That said, Ukraine could do much more to stabilise its end of the business. Instead of constantly casting itself as a victim of Russian bullying, it should bolster its bargaining position. First, it should pay its gas debts on time so that arrears do not, as they always do, become a weapon in Gazprom's hands. Next, it must finish the half-complete reform of the domestic market so that gas flows transparently to consumers in one direction and cash flows back, in accountable ways, in the other. Finally, Kiev, in co-operation with Moscow, must fulfil pledges to cut intermediaries out of the wholesale trade and strike a direct deal with Gazprom.
Gazprom protests too much. The gas trade is so opaque that it is difficult to say where the dividing lines lie between politics, commerce and the personal interests of those running the business in central Asia, Russia and Ukraine. But it is clear that in this high-stakes game, Russia holds the top cards. So it is fair to assume that if Russia really wanted to take politics out of the trade it would do so.
That said, Ukraine could do much more to stabilise its end of the business. Instead of constantly casting itself as a victim of Russian bullying, it should bolster its bargaining position. First, it should pay its gas debts on time so that arrears do not, as they always do, become a weapon in Gazprom's hands. Next, it must finish the half-complete reform of the domestic market so that gas flows transparently to consumers in one direction and cash flows back, in accountable ways, in the other. Finally, Kiev, in co-operation with Moscow, must fulfil pledges to cut intermediaries out of the wholesale trade and strike a direct deal with Gazprom.
