January 4, 2009 / 8:37 AM / in 9 years

Russia gas disruption spreads to Czechs, Turks

KIEV/MOSCOW (Reuters) - Russian gas supplies to the Czech Republic and Turkey dropped on Sunday, the latest victims of a deepening row between Russia and Ukraine over debts and pricing.

Russian natural gas supplies fell by five percent to the Czech Republic as a result of the stand-off, which began when Russia cut off the gas to Ukraine on New Year’s day. The two sides blame each other for the dispute.

“It is the first signal of the Russia-Ukraine crisis in the Czech Republic,” said a spokesman for gas importer RWE Transgas.

European energy firms, which received about a fifth of their gas via pipelines through Ukraine, said they had enough gas stockpiled to maintain supplies for several days.

But analysts said Europe, where temperatures in many places were below zero, could face problems if the row dragged on beyond that.

European Union ambassadors will hold an emergency meeting in Brussels on Monday, where the Czech presidency of the bloc will brief members about talks it has been holding with officials from Kiev and Moscow.

Turkey reported a small fall in the gas it receives from Russia through a pipeline that passes through Ukraine, joining Poland, Romania, Bulgaria and Hungary which also said their supplies had dropped. Germany and France were unaffected.

Ukraine -- long at odds with the Kremlin over its ambition to join NATO -- accused Moscow of deliberately cutting flows to Europe and said the bloc needed to send a signal to the Kremlin that it cannot bully its pro-Western neighbors.

“If Europe ... does not help us get out of this situation, then it can expect a more aggressive position from Russia on gas and other issues,” Oleksander Shlapak, a senior Ukrainian presidential aide, told Reuters.

Russian gas export monopoly Gazprom blamed Ukraine for siphoning off or blocking deliveries of gas equivalent to one sixth of the total Russian supply to Europe, and said it was increasing exports to make up some of the shortfall.

“While we have been trying for four days, regardless of the holidays, to try to find a way out of this crisis, (the Ukrainian negotiators) are staying in Kiev and not continuing talks,” said Gazprom spokesman Sergei Kupriyanov.

Igor Yolkin, an official with a Gazprom subsidiary in Bulgaria that distributes gas to the Balkan region, told Reuters supplies to Greece and Macedonia were also reduced. That could not immediately be confirmed with domestic importers.

Russian gas export monopoly Gazprom's headquarters is seen in Moscow, December 3, 2009. European Union president the Czech Republic said on Saturday it did not intend to become a participant or mediator in gas contract disputes between Russia and Ukraine, but urged both sides to reach an agreement soon. REUTERS/Sergei Karpukhin

POSITIONS ENTRENCHED

The gas row, which mirrors a similar dispute three years ago that also disrupted supplies, is likely to raise new questions in Europe about Russia’s reliability as a gas supplier.

Russia’s ties with the West are still fraught after it waged a war with Georgia last August. Some policymakers see parallels between that conflict and Russia’s treatment of Ukraine.

Analysts say whether consumers and industries in Europe suffer problems with their fuel supplies depends on a swift resolution of the dispute.

Slideshow (7 Images)

Gazprom and Ukrainian state energy firm Naftogaz have been in daily contact by telephone, officials said, but with no face-to-face negotiations in sight both sides seemed to be entrenching their positions.

Moscow and Kiev said they would bring cases against each other in an arbitration court in Stockholm that deals with international commercial disputes.

Gazprom chief executive Alexei Miller said that since Ukraine had turned down a previous proposal to pay $418 per 1,000 cubic meters of gas, he was raising the price to $450. That is more than twice the sum Kiev says it is willing to pay.

Political leaders of Russia and Ukraine, most of them on holiday, have been silent on the issue for days.

Ukraine’s financial markets re-open on Monday after the New Year holiday, offering the first indications of how badly the gas crisis could hurt its already fragile economy.

Presidential aide Shlapak told Reuters on Sunday the economy was set to contract by between 3 and 5 percent this year, leaving it little room to accept the higher gas prices Russia is demanding.

European Union customers pay about $500 per 1,000 cubic meters of Russian gas, though that price is set to drop in line with crude oil, which tumbled in 2008. Gas prices traditionally follow oil prices with a time lag of about six months.

(Additional reporting by Alexandra Hudson in Ankara, Toni Vorobyova and James Kilner in Moscow, Sabina Zawadzki, Pavel Polityuk and Guy Faulconbridge in Kiev and European bureaux)

Writing by Christian Lowe; Editing by Jon Boyle

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