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Pleas but no progress in European gas crisis

Complaints from European leaders failed Wednesday to thaw the political dispute between Russia and Ukraine that has blocked natural gas shipments to much of Europe in the dead of winter.
Image: Gazprom's Sudzha compressor station
A Gazprom technician works at the Russian gas export company's Sudzha compressor station on Wednesday. Denis Sinyakov / Reuters
/ Source: The Associated Press

Heated complaints from European leaders failed Wednesday to thaw the economic and political dispute between Russia and Ukraine that has blocked natural gas shipments to much of Europe in the dead of winter.

With the crisis moving into its second week, Moscow and Kiev both held rigidly to allegations that the other country was to blame for upending Europe's winter heating plans. The European Union appeared to have little leverage other than pleading for a restoration of the gas that heats their homes and powers their factories. Even EU threats of a possible wave of lawsuits did not move either nation into action.

In an apparent indication that no resolution is on the horizon, Russian President Dmitry Medvedev proposed European gas-consuming countries send their leaders to Moscow on Saturday for a summit.

Both Medvedev and Prime Minister Vladimir Putin accused Ukraine of holding Europe hostage, while Kiev said Russia was deliberately erecting technical obstacles to delivering gas to Europe through Ukrainian pipelines.

European Commission President Jose Manuel Barroso called the situation "unacceptable and incredible" and said he would urge EU energy companies to sue if a resolution doesn't come soon.

That suggestion was embraced by Ukraine's president. "We are ready to support any European efforts to force our Russian partners to resume full contract supplies," Viktor Yushchenko said in Poland after meeting with Polish President Lech Kaczynski.

Harsh winter without heat
The crisis has deepened European concerns about Russia's willingness to use its energy riches as a political tool. It also raised questions about the reliability of Ukraine, whose pro-Western leaders want to join the EU but are mired in dangerous disputes with Russia and intramural rivalries that have nearly paralyzed the government.

About 20 percent of Europe's gas comes from Russia via Ukrainian pipelines. Bulgaria and Slovakia are entirely dependent on Russia for gas and the cutoff that began Jan. 7 has inflicted wide hardships on their people in the middle of a harsh winter.

Russia stopped selling gas to Ukraine on Jan. 1 because of a price dispute, then accused Ukraine of stealing Europe-bound gas and tuned off the taps entirely on Jan. 7.

EU countries had hoped supplies would be restored Tuesday after they brokered a deal sending monitors to keep tabs on the flow of gas. But while Russia's gas monopoly Gazprom resumed some gas supplies, Ukraine did not send the gas on to Europe, saying the route that Gazprom demanded would force Ukraine to halt domestic gas supplies to a large swath of territory.

The same thing happened again Wednesday, said Oleh Dubina, the head of Ukraine's gas company Naftogaz.

"Unfortunately, we answered the same way: We cannot leave our regions without gas," Dubina said.

Putin said it was up to Ukraine to make the deliveries possible.

"We opened the tap, and are ready to supply gas, but on the other side, the tap is closed," Putin told the prime ministers of Bulgaria, Slovakia and Moldova in a meeting at his residence outside Moscow. "Nobody, no transit country, has the right to abuse its transit location to take other customers hostage."

"Millions of Europeans feel like hostages and are truly suffering," said Bulgarian Prime Minister Sergei Stanishev.

Slovakian Prime Minister Robert Fico added that "Ukraine is losing the trust of European partners because of its behavior."

War of words
Yushchenko in turn claimed that Russia was trying to drive Ukraine's already-struggling economy into penury by charging unfairly high prices, a strategy he claimed aimed to eventually take control of Ukraine's pipeline network.

Ukraine also claims that Russia has not sent enough so-called "technical gas" to pump the rest of the gas west to Europe. Who should pay for the technical gas is also in dispute.

Russian officials, including Deputy Prime Minister Igor Sechin, are suggesting that Ukraine could use gas from its own reserves to supply Europe, with the promise that Russia would replenish the stocks. But with mistrust high between Kiev and Moscow, and Russia claiming Ukraine still owes gas debts, Ukraine appeared unlikely to take the idea seriously.

The cutoff has forced thousands of businesses in Europe to shut down or cut production.

Serbia reported Wednesday that its power grid was getting overloaded as thousands switched to electric heat and urged residents to conserve energy.

Gazprom chief Alexei Miller reported that the dispute has cost the company $1.1 billion in lost income from the collapse of deliveries to Europe, which prompted the Russian president to say Gazprom should sue Ukraine.

Russia and Gazprom "cannot lose so much money in the current conditions," Medvedev told Miller in televised comments, referring to the global financial crisis.

High risks
Russia and Ukraine are deeply at odds over what Ukraine will pay for Russian gas in 2009. Ukraine last year paid $179.50 per 1,000 cubic meters; Russia now wants Ukraine to pay European market price for gas, about $450.

The crisis raises high risks for both Russia and Ukraine, ex-Soviet republics with deep historical ties but an increasingly troubled relationship.

European countries spooked by Russia's increasing assertiveness could redouble efforts to wean themselves from Russian gas.

Czech Prime Minister Mirek Topolanek, whose country holds the EU presidency, proposed Wednesday that EU give its "highest priority" to a pipeline that would bypass Russia and deliver Caspian Sea gas via Turkey.

Russia, meanwhile, has used the gas dispute to push for new pipelines to Europe that would bypass Ukraine.

Underlying the energy dispute is a struggle between Russia and the West over the future of Ukraine, whose leaders have angered Russia by pressing for integration with NATO, supporting Georgia in its August war with Russia and threatening to evict a Russian naval base within a decade.

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