Gas row cuts Ukraine industry gas use by a third
KIEV (Reuters) - Ukrainian domestic industrial gas consumption has tumbled by about a third since Russia cut off supplies, Naftogaz said on Friday, the latest sign that the dispute is starting to sap Ukraine's crisis-gripped economy.
Ukraine's economy, which was already falling toward the worst recession for a decade, has been surviving for more than eight days without any gas imports.
Kiev says it has gas reserves that cover more than two months of consumption. But some Ukrainian companies and utilities have already cut back gas consumption and are trying to switch to other fuels such as fuel oil and coke.
Industrial gas consumption has fallen to 45 million cubic meters (mcm) a day from 65-70 mcm a day before the gas row, said Volodymyr Trikolich, deputy head of state-run Naftogaz.
"We have cut delivery volumes a little to metals producers but this has in no way affected their production," Trikolich told reporters.
"What point is there in processing gas... if there are massive amounts of unsold produce in the warehouses (of chemical producers)? What is the point in that?"
Sinking world demand has hammered Ukraine's steel and chemicals sectors, which account for more than half of exports, and popped a domestic consumer boom.
Chemical producers make up about 12 percent of exports and investors are focused on the worsening current account deficit after the hryvnia currency hit historic lows in mid-December.
The hryvnia was quoted by local banks at about 7.7 per U.S. dollar on Friday.
Ukraine's Association of Metal Producers, Metallurgprom, said enterprises had cut production due to cuts in gas deliveries, Interfax-Ukraine reported.
The association said producers were working at a "critical minimum" but gave no figures on metals production cuts. Ukraine's metals companies were among the first victims of the economic crisis and slashed production in late 2008.
The economy is set to contract by 3 to 5 percent in 2009 and many indebted Ukrainians are now facing rising unemployment after industrial output sank 20-30 percent toward the end of 2008.
(Reporting by Pavel Polityuk, writing by Guy Faulconbridge; Editing by Dominic Evans)
