EU threatens legal action over Russian gas cut

STRASBOURG, France (Reuters) - European Union nations and firms may sue Russia and Ukraine unless the two countries quickly restore gas supplies to the bloc, the European Commission's president said on Wednesday.

Speaking at the European Parliament, Jose Manuel Barroso also said that unless gas started flowing soon he would advise the bloc's 27 member states to take measures to secure alternative long-term suppliers of energy.

"I would like to convey a very clear message to Moscow and Kiev. If the agreement sponsored by the EU is not honored as a matter of urgency, the Commission will advise EU companies to take this matter to the courts," he said.

A pricing dispute between Moscow and Kiev has cut supplies of natural gas to European countries via Ukraine, hitting 18 countries in the depths of winter.

The gas has yet to start flowing again despite a recent agreement on transit brokered by the EU.

"The current situation is in short most unacceptable and incredible," Barroso said during a debate on the EU's program for the first half of 2009.

"If the agreement is not honored, it means that Russia and Ukraine can no longer be regarded as reliable."

Barroso later told a news conference that legal action could be taken under contracts EU companies have with Russian gas monopoly Gazprom.

Ukraine could be targeted if Kiev had failed to respect the energy charter, an international accord it had signed, he said.

Czech Prime Minister Mirek Topolanek, who holds the EU's rotating presidency for the first half of this year, told the debate that gas agreements must be made more transparent to avoid energy cuts in the future.

He added that as part of bolstering its energy security the EU should step up efforts to build the Nabucco pipeline, which might one day carry Caspian or Middle Eastern gas to the EU.

EU countries should also increase minimum crude oil storage to 120 days from the current 90 days, he said.

Topolanek and Barroso suggested the row between Russia and Ukraine was political rather than technical and commercial.

Many analysts say Russia would like to see formerly Soviet Ukraine returning to its sphere of influence instead of seeking closer ties with the EU. Russia has blamed political divisions within Ukraine.

"There is a technical dimension to the conflict, but I see the situation as a lack of goodwill on both sides to talk to each other," Topolanek said.

(Writing by Marcin Grajewski, editing by Dale Hudson and Philippa Fletcher)