Russia, Ukraine still deadlocked after gas talks

Russia and Ukraine failed to resolve a gas row at a meeting in Moscow but will continue talks to end the dispute that has choked off supplies to Europe, a senior Ukrainian gas official said on Thursday.

“We are in negotiations,” Ukraine’s Naftogaz chief Oleh Dubyna told the European Parliament after an overnight meeting with Alexei Miller, head of Russia’s state-controlled gas monopoly Gazprom.

“I can see just purely economic gaps between Naftogaz and Gazprom.”

Gazprom fully suspended supplies of transit gas towards Ukraine on Wednesday, saying there was no longer any point delivering the gas because Kiev had shut down the pipelines.

Ukraine—whose pro-Western leaders have clashed with the Kremlin over their drive to join Nato—said Russia was deliberately starving Europe of gas. Russia cut off gas for Ukraine’s domestic consumption on New Year’s Day after disagreements over gas prices and debts owed by Ukraine.

South-East Europe has borne the brunt of the disruption, but it has affected supplies as far west as France and Germany as Europe faced freezing mid-winter temperatures.

Hundreds of thousands of people across the Balkans went without heating on Thursday and more factories closed. In Turkey, production at three power stations was halted.

European concern
Dubyna was quoted by Interfax-Ukraine agency as saying the Moscow talks ended with “no concrete results” and that three-way talks between Naftogaz, Gazprom and the European Union in Brussels had been cancelled at the behest of the Russians.

A Gazprom official said no such talks had been planned.
“There were no talks scheduled with the Ukrainian delegation for today [Thursday] at all. We have no clue which three-way talks Naftogaz is talking about,” the official told Reuters.

Gazprom said Miller would meet European Commission President Jose Manuel Barroso.

The European Union has expressed increasing concern at the gas cut-offs. “We need to resume the gas flows in Europe. We can’t be blackmailed,” Czech Deputy Prime Minister Alexandr Vondra, whose country holds the EU presidency, said in Prague.

The EU is hoping to broker an accord on an EU mission to monitor the flow of Russian gas through Ukraine destined for Europe. A European Commission energy director said on Thursday EU observers would be ready in two days.

The dispute between Kiev and its former Soviet master in Moscow follows tensions over Ukraine’s efforts to join Nato, a move bitterly opposed by Moscow and viewed with wariness even by European members of the alliance and by investors.

Russian President Dmitry Medvedev spoke by telephone late on Wednesday with Ukrainian President Viktor Yushchenko.

Medvedev told his Ukrainian counterpart gas supplies had become hostage to squabbling in the Kiev leadership and that Moscow would only resume pumping gas for Ukraine’s own use if Kiev agreed to pay a market price for the fuel.

Gazprom has said it has increased supplies to the European Union and Turkey via other routes. Despite those measures, the dispute cut Russia’s supplies to Europe—which depends on Moscow for a quarter of its gas supplies—by half.

The reduction in supplies has been sharper and more prolonged than a similar disruption in January 2006.

The euro zone’s major economies have escaped significant economic repercussions, but France has reported a drop in supplies and an Italian Industry Ministry spokesperson said Italy has begun tapping its stockpiles of natural gas.

A total of 18 countries were experiencing supply disruptions. Most were drawing on alternative sources or using stockpiled gas, but with the row in its eighth day, those reserves were dwindling.—Reuters

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