* Kiev says gas to Germany now at risk
* Russia says Ukraine siphoning gas
* EU's Barroso appeals for swift resolution of row
* Serbia, Bulgaria urge customers to reduce demand
By Conor Humphries and Pavel Polityuk
MOSCOW/KIEV, Jan 5 Russia reduced gas flows to
Europe via Ukraine on Monday, a measure it said was to stop its
neighbour siphoning off fuel but which Kiev said could
jeopardise supplies to European countries including Germany.
Countries in southern and eastern Europe reported new falls
in gas supplies from Russia while Serbia and Bulgaria urged
industry to scale back demand and switch to alternative fuels,
the first sign supply disruptions were hitting customers.
In an escalation of a pricing row with Ukraine that saw
Russia cut off gas supplies to its neighbour on New Year's Day,
Russian Prime Minister Vladimir Putin ordered supplies pumped
via Ukraine to Europe to be cut by about one sixth -- the same
amount Moscow accuses Kiev of illegally siphoning off.
"Yes, cut it today," Putin told Alexei Miller, chief
executive of state-controlled gas export monopoly Gazprom
(GAZP.MM), adding that the company should brief European Union
states on what it was doing.
Europe relies on pipelines across Ukraine for one fifth of
its gas. Russia alleges that since the cut-off Kiev has been
taking supplies intended for customers in Europe, while Ukraine
blames Russia for the supply shortfalls.
European Commission President Jose Manuel Barroso said he
had appealed to Putin and Ukrainian Prime Minister Yulia
Tymoshenko not to let their dispute affect Europe's gas
"I hope that the matter will be resolved, as the reality is
that if it is not then it may create problems for European
countries who are not responsible for the situation," he said.
The disruption to gas flows has raised new questions about
Russia's reliability as an energy supplier and rekindled Western
suspicions -- still fresh after Russia's war with Georgia last
year -- that the Kremlin bullies its pro-Western neighbours.
Russia has clashed repeatedly with Ukraine's pro-Western
leaders over their ambition to join the NATO alliance. Gazprom
denies any political motive in the row and says it is purely
about Kiev's refusal to pay a fair price for its gas.
Ukrainian state energy firm Naftogaz said in a statement
Putin's order to cut supplies threatened gas flows to 10
countries including Germany, Europe's biggest economy. Gas
deliveries to Germany have so far been unaffected.
The supply disruptions are worse than those caused by a
similar row over gas three years ago, with countries in
southeastern Europe reporting the steepest falls in flows. For a
list of countries affected, click on [ID:nL546299].
Greek natural gas operator DEPA said delivery of Russian gas
was down by a third, supplies to Romania dropped 33.8 percent
between Sunday and Monday, and Macedonia said its gas flows also
fell by about a third.
The disruptions come at the worst possible time of year
because cold temperatures mean demand is high. The daytime
temperature in Bulgaria on Monday was minus 5 degrees Celsius
and in Hungary, another affected country, it was minus 3.
Russia has said it would compensate for the reduction in
supplies via Ukraine by pumping more gas through alternative
routes, which pass through Belarus and Turkey.
It was unclear if these routes had the spare capacity to
cover the shortfall. For a factbox on export routes for Russian
gas, click on [ID:nL5024520].
With the row in its fifth day and no sign of a resolution or
even a resumption of aborted talks between Russia and Ukraine,
energy firms were concerned the gas they had stockpiled might
not see them through the crisis.
"We have already asked our major consumers to prepare plans
for switching to another fuel," said Dusan Bajatovic, head of
Serbia's state-run gas monopoly. Bulgaria's Economy Ministry
said it was taking similar measures.
As demand for gas tightened, Norwegian oil and gas producer
StatoilHydro (STL.OL) -- Europe's No. 2 supplier after Gazprom
-- pledged to sell surplus natural gas to EU markets.
The head of a consortium hoping to build a pipeline that
will provide Europe with an alternative to Russian gas supplies
said on Monday he believed the project, dogged by doubts about
its viability, would receive key EU approvals early this year.
"Diversification will be even more important in light of ...
developments," said Reinhard Mitschek, Managing Director of the
Nabucco consortium, referring to the Russia-Ukraine conflict.
The project plans to plans to pump gas from the Caspian region
to the EU.
Gazprom is demanding Ukraine pay $450 per 1,000 cubic metres
of gas after Kiev rejected a previous proposal of $418. The
price is more than double what Kiev says it is willing to pay,
though less than what most EU states pay.
EU customers pay about $500 per 1,000 cubic metres of
Russian gas, but the price -- which traditionally follows oil
with a six-month lag -- is set to drop in line with crude, which
has lost two-thirds of its value since peaking in July 2008.
(Additional reporting by Guy Faulconbridge and Sabina Zawadzki
in Kiev, James Kilner in Moscow and European bureaux; Writing by
Robin Paxton and Christian Lowe; Editing by Jon Boyle)