Russia Cuts Gas Exports to Ukraine as Debt Talks Fail

OAO Gazprom cut natural-gas shipments to Ukraine after failing to resolve a debt dispute, rekindling concern about Russia’s reliability as an energy supplier.

Gazprom, Russia’s state-run natural-gas export monopoly, reduced deliveries to Ukraine by 25 percent at 10 a.m., spokesman Sergei Kupriyanov told reporters today in Moscow. Gazprom will supply European consumers in full, he said.
The standoff echoes a pricing dispute in January 2006, when Gazprom turned off all Ukrainian gas exports for three days, causing volumes to fall in the European Union. About a fifth of Europe’s gas travels through Ukrainian pipelines from Russia.

“This still doesn’t represent a crisis, just a greater degree of brinkmanship,” Geoffrey Smith, deputy head of research at Renaissance Capital Ukraine, said in an e-mail after the announcement. “The weather is warm and forecast to stay so, and storage both in Ukraine and further west is unlikely to be depleted after another mild winter.”

Kupriyanov said Feb. 29 that the state-controlled company had warned its European trading partners about the situation.

“Gazprom is a reliable energy supplier, but we cannot and will not deliver gas without payment,” Kupriyanov said today.

Bloomberg