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Russia restarts gas flow to Europe via Ukraine

Russian natural gas began flowing Tuesday into Ukraine after a nearly two-week cutoff that left parts of Europe cold and underscored the continent's vulnerability and dependence on Russia's energy.
Russia Ukraine Gas
A technician inspects pipeline equipment and gas pressure at the gas metering station in Pisarevka, Russia, on the border with Ukraine on Tuesday. Svetlana Kozlenko / AP
/ Source: The Associated Press

Russian natural gas finally flowed into Europe once again Tuesday, after Moscow and Kiev pulled back from an energy war that drastically reduced supplies to many nations for two tough winter weeks.

But the resolution looked more like a cease-fire than a permanent peace, with no guarantee against renewed hostilities between Russia and Ukraine, two former Soviet neighbors with sharply contrasting views of the future.

The experience of the last two weeks has left many in Europe bitter toward both and eager to sever an energy lifeline that leads to the gas fields of Siberia.

Russia's gas monopoly Gazprom began pumping gas into Ukraine around 2:30 a.m. ET, spokesman Boris Sapozhnikov said by telephone from the Sudzha metering station on the border with Ukraine. Ukraine's state gas company Naftogaz confirmed gas flowed through Sudzha, Pisarevka and other gas metering stations on its eastern border.

Several hours later, gas began pouring across Ukraine's western border into Slovakia, Hungary, Bulgaria and Moldova — some of the nations hardest hit in the dispute. It was likely to take longer for other customers in Europe — which gets about a fifth of its natural gas from Russia — to begin receiving shipments sent across Ukraine.

Russia halted the supplies on Jan. 7 amid a dispute with Ukraine over 2009 gas prices, alleging that Ukraine was stealing gas destined for Europe. Ukraine disagreed, saying Russia was not sending enough "technical gas" to pump the rest toward Europe.

More than 15 nations in the Balkans and eastern Europe were left scrambling for alternative energy sources. Thousands of factories shut down for lack of fuel and millions shivered in unheated homes.

Europe: We were 'held hostage'
The European Union — dismayed when a deal sending EU monitors to key pipeline junctures failed to get gas flowing — marked the renewed deliveries with relief and remonstrations.

"It was utterly unacceptable that European gas consumers were held hostage to this dispute between Russia and Ukraine," European Commission President Jose Manuel Barroso said. "We must not allow ourselves to be placed in this position in future."

Barroso said before the dispute was ultimately resolved, Russian Prime Minister Vladimir Putin and his Ukrainian counterpart, Yulia Tymoshenko, had "systematically" vowed to end their dispute but then reneged.

"I will not forget that," he told reporters.

Many in the Balkans and eastern Europe won't forget it, either.

Slovakia was forced to ration gas, favoring homes and hospitals and forcing about 1,000 companies to halt or limit production. Impoverished Moldova switched to heating oil for power plants, and its people stockpiled bread and built wood fires to stay warm.

Serbia and Bosnia, for years at odds, came together as Serbia shared some of its own precious gas supplies to help Bosnia cope.

No such warmth is likely between Russia and Ukraine.

The mostly Slavic neighbors share millennium-old historical ties, but their relations are vexed by widely different geopolitical visions as Ukraine's leaders try to guide their nation toward NATO and the EU.

Putin said the 10-year gas supply and transit deals signed with Ukraine on Monday should bring an end to their annual gas price wars. But given the political bad blood between the nations, as well as infighting inside Ukraine, that is far from assured.

Deal details
Ukraine is to receive gas at a 20 percent discount from this year's average European price, which Russia says is $450 per 1,000 cubic meters. That price is likely to decrease as the effect of slumping oil prices kicks in, but it still means a hike from the $179.50 Ukraine paid last year.

Russia pays the same amount as last year to ship the gas through Ukraine's pipelines. But in 2010, both countries are to pay market prices — Ukraine for the Russian gas it uses and Russia for the transit of gas to Europe.

Any price increases will further cripple Ukraine's inefficient economy, already badly hurt by the global financial crisis. The office of Ukrainian President Viktor Yushchenko — Tymoshenko's political rival — has already criticized the deal.

With the ink barely dry, Gazprom chief Alexei Miller suggested Ukraine might not be trusted to pay higher prices.

"There is no reason to believe that the situation with payments will improve after a significant price rise," he told Russian President Dmitry Medvedev in a televised meeting.

Gazprom, meanwhile, lost more than $1 billion in sales to Europe in the last two weeks and has inspired its customers to seek alternative energy sources. In the long run that could mean trouble for Russia, which is highly dependent on energy revenues for its budget.