Russia's Gazprom Shuts Off Gas To Ukraine Russia's gas monopoly Gazprom has begun shutting off natural gas supplies to Ukraine after a deadline passed for talks over a price dispute. There are fears that the cutoff could affect gas deliveries to parts of Europe at the height of the winter season. In 2006, Moscow cut off supplies to Ukraine and caused a brief disruption in gas supplies to Europe. NPR's Gregory Feifer talks with Steve Inskeep about Gazprom's decision.

Russia's Gazprom Shuts Off Gas To Ukraine

Russia's Gazprom Shuts Off Gas To Ukraine

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Russia's gas monopoly Gazprom has begun shutting off natural gas supplies to Ukraine after a deadline passed for talks over a price dispute. There are fears that the cutoff could affect gas deliveries to parts of Europe at the height of the winter season. In 2006, Moscow cut off supplies to Ukraine and caused a brief disruption in gas supplies to Europe. NPR's Gregory Feifer talks with Steve Inskeep about Gazprom's decision.

STEVE INSKEEP, host:

Russia has shut off supplies of natural gas to Ukraine. It's part of a price dispute, and it is bad news for the rest of Europe. Many Europeans get close to a quarter of their gas from Russia, and much of that flows through Ukraine on its way to countries further west. NPR's Gregory Feifer's in Moscow and is covering this story. Greg what's the nature of the dispute here?

GREGORY FEIFER: Well, first of all, $2 billion of debt that Gazprom says it didn't get from Ukraine, but mainly the dispute is about the price of gas. Moscow is increasing its rate for gas this year, but it's offering what it says is a discount price of $250 per thousand cubic meters of gas. Now Ukraine says it wants to pay $201. Both countries have been hard hit by the global financial crisis, but Ukraine has already faced power cuts, and it's not clear if it really can pay any more. But I have to say that many also believe this dispute is about politics as well. Russia's often accused of using its control over energy as a political weapon to punish former Soviet states. Relations between Moscow and Kiev have been incredibly low, especially following Ukraine's support for Georgia after Russia's attack last summer. And some believe Russia wants to make life difficult for Ukraine.

INSKEEP: So we have a reminder here of why some people are calling Russia an energy superpower, and maybe they still are even with oil prices dropping again, but that leads to the next question here Greg. If they're cutting off gas to Ukraine, what then happens to the rest of Europe?

FEIFER: It's not clear, as you said Europe depends on Russia for its gas. 80 percent of Russian supplies cross Ukraine to Europe. Both Kiev and Moscow say they guarantee those supplies will continue unaffected, but during the last shut-off of Russian gas to Ukraine, which took place in 2006, deliveries to Europe dropped very quickly. Some European countries in the former Soviet block depend on Russia for up to 90 percent of their gas, so for them it's a very big worry. Gazprom now says it's increased its supplies to Europe to make up for any possible disruptions. But it's also accusing Ukraine of threatening to confiscate European gas supplies, and it says Kiev is blackmailing Europe.

INSKEEP: Any chance this could be over quickly?

FEIFER: Both sides have called for negotiations to resume. In 2006, the shut-off lasted for several days, but I have to say that what's certain is that the longer this crisis lasts, the more attention will again be drawn to Russia's role as a major energy exporter as you said. Relations with the west are low and with pro-western countries like Ukraine, and this will make matters surely worse. And of course on top of that there's the global financial crisis. As I said Russia has been hit hard and Ukraine even harder, and it's really upped the stakes for both sides to negotiate harder.

INSKEEP: Are they really negotiating, Gregory?

FEIFER: They're not negotiating right now. They've - both sides have urged talks to restart. We've heard a lot from Moscow, and what's been really noticeable has been the tough rhetoric against Ukraine. President Medvedev was on television last night attacking Ukrainian leaders. Accusing them of ineptitude and really personalizing the stand-off. And I have to say it certainly looks like Moscow is using the crisis, at least publicly, to hammer the government in Kiev.

INSKEEP: Greg, thanks very much.

FEIFER: You're welcome.

INSKEEP: Gregory Feifer's NPR's Moscow correspondent. This is NPR News.

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Russia Vows To Cut Ukraine Gas Supplies

Russia Vows To Cut Ukraine Gas Supplies

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As New Year's Day draws near, so do worries about another energy crisis in Europe.

Russia says it will suspend natural gas supplies to Ukraine Thursday in a dispute over prices.

Most of the gas Russia supplies to Europe also goes through Ukraine. Both sides promise European supplies will be left untouched, but that's not what happened the last time Moscow and Kiev had a falling out.

When Russia's state monopoly, Gazprom, cut supplies to Kiev in 2006, the move caused temporary disruptions of deliveries to Europe. That prompted fears of an energy crisis during a bitterly cold winter.

Now, for the fourth year in a row, Russia and Ukraine are locked in a dispute. Gazprom says Ukraine must pay a $2 billion debt and pay much more for gas next year — or face a shutoff Thursday morning.

The two sides are still talking, but the atmosphere appears more hostile than in previous years.

'Blackmail'

Wednesday, Gazprom's export chief, Alexander Medvedev, accused the Ukrainians of planning to confiscate gas destined for Europe.

"Such a move can only be called blackmail," Medvedev said, "of Russia, Gazprom and Western Europe."

Europe gets a quarter of its gas from Russia. Even though Kiev says it will guarantee the 80 percent that passes through Ukraine, European countries are watching events nervously.

The Ukrainians say they've paid the debt they owed Gazprom. But now the price of gas for 2009 is the big issue. At one point, Russia was talking about doubling the rate.

Last week, Ukrainian President Victor Yushchenko said Russia's dramatic price hikes are unacceptable.

Making Life Difficult For Kiev

But Russia's response has been to step up its attacks on the Ukrainian leadership. Russian President Dmitri Medvedev said the failure of Ukraine to pay its debts showed the impotence of the government in Kiev.

"It's embarrassing to watch," Medvedev said — and he warned of unspecified sanctions from Moscow.

The dispute is about much more than the price of gas. Russia insists it's charging a fair market rate, but most analysts believe Moscow is using its control of vast energy supplies as a political weapon against Ukraine, a pro-western former Soviet country on its border.

"Since Ukraine's Orange Revolution four years ago, Moscow has done everything it can to make life more difficult for Kiev," said Andrei Illarionov, who used to be chief economic adviser to then-President Vladimir Putin. "We've seen the same kinds of policies carried out against Georgia, although thankfully in Ukraine's case it hasn't yet led to war."

Gazprom is desperate for cash after losing billions of dollars in the global financial crisis. But Ukraine has been hit even harder than Russia and has already faced power cuts. Energy experts say Kiev would be very hard pressed to come up with more cash for its Russian gas bill.