Russia to cut gas supplies to Ukraine

RUSSIA: Russia’s state gas monopoly Gazprom said it will cut off all gas supplies to Ukraine on Thursday morning after the two sides failed to reach an agreement on how much Ukraine will pay in 2009.

The cutoff announced late Wednesday by Gazprom CEO Alexei Miller threatened a replay of the January 2006 crisis, when a halt in Russian gas shipments to Ukraine during a similar dispute resulted in a brief reduction of supplies to Europe.

But Miller said Gazprom would continue full shipments to the European Union, which gets about a quarter of its gas from the Russian company, most of it through pipelines that cross Ukraine.

The Ukrainian president’s energy adviser, Bohdan Sokolovsky, also said Ukraine would guarantee the delivery of gas to Europe.

“Whatever Russia ships we will deliver,” he said. “This is what we have committed to.”

Gazprom had warned it would cut supplies unless Ukraine paid off all of its debt and signed a deal for 2009 deliveries by midnight. Neither was done, Miller said. “Gazprom will cut off 100 percent of gas supplies to Ukrainian consumers at 10 a.m. (2 a.m. EST, 0700 GMT) on Jan. 1.,” Miller told reporters. “All responsibility for the situation rests on the Ukrainian side.”

Ukraine’s gas company Naftogaz said it paid $1.5 billion to cover the debt, but Miller said Gazprom had not yet received the money.

Moscow,Thursday, AP