Worried EU states to fly to Moscow over gas row

By Dmitry Zhdannikov and Ron Popeski

MOSCOW/KIEV (Reuters) - Russia and Ukraine faced another day of sparring over gas supplies on Wednesday and two European Union states launched fresh diplomacy to end a dispute that is weighing heavily on their economies.

Russia began pumping gas meant for Europe via Ukraine on Tuesday for the first time in nearly a week. But the EU said little or no gas was flowing to countries suffering urgent energy shortages.

Russia accused Ukraine of shutting off gas to Europe, but Kiev said there was not enough pressure in the pipeline system.

The crisis has disrupted supplies to some 18 countries at the height of winter, shutting down dozens of factories in southeast Europe.

Two of the worst hit EU states, Bulgaria and Slovakia, were sending their prime ministers to Moscow and Kiev on Wednesday in fresh efforts to get gas supplies restored.

Bulgaria's Sergei Stanishev and Slovakia's Robert Fico, were due to see Russian Prime Minister Vladimir Putin in Moscow and Ukrainian Prime Minister Yulia Tymoshenko in Kiev. It was not clear which capital they would visit first.

Stanishev is under pressure to secure supplies for his country of 7.6 million people as limited domestic reserves are dwindling and anger among Bulgarians is mounting against his Socialist-led government.

Slovakia, which has a population of 5.4 million and gets almost all its gas from Russia, declared a state of emergency on January 6, under which gas deliveries to large clients were reduced. About 1,000 companies were forced to shut or cut production.

A deal brokered by the EU, which gets a quarter of its gas from Russia, had been intended to get supplies moving on Tuesday, with international monitors in place to ensure that Ukraine was not siphoning off any gas, as Moscow has alleged.

The Russian state-controlled gas monopoly Gazprom.declared force majeure on gas exports to Europe, meaning circumstances beyond its control prevented it from meeting its obligations to clients.

Ukraine told the EU there were "technical difficulties" in that the pressure of gas from Russia was too low.

Gazprom is demanding Kiev hand over $614 million for unpaid gas bills and pay $450 per 1,000 cubic meters of gas in 2009. That is similar to rates paid by EU customers but a big rise on last year's price of $179.5.

Analysts in Kiev say Ukraine, saddled with debt and hard hit by the global slowdown, cannot afford that price.

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The row, which has dented the reputation of both Moscow and Kiev as energy suppliers, also reflects their poor political relations. Moscow is vehemently opposed to moves by Ukraine's pro-Western leadership to join the U.S.-led NATO alliance.