Russia reduces gas flows to Europe via Ukraine

By Conor Humphries and Pavel Polityuk

MOSCOW/KIEV (Reuters) - Russia reduced gas flows to Europe via Ukraine on Monday, a measure it said was to stop its neighbor siphoning off fuel but which Kiev said could jeopardize 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 neighbor 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, 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 supplies.

"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.

WINTER TEMPERATURES

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 neighbors.

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.

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.

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