Europe facing new gas crisis

BRUSSELS, June 23 (UPI) -- The European Union, the International Monetary Fund and other financial regimes are working to avert a summer gas crisis stemming from Ukrainian economic woes.

A January dispute between Russian gas giant Gazprom and Ukrainian utility company Naftogaz over gas debts and contracts forced disruptions in gas shipments, leaving a Russian-dependent European market starved for gas for weeks.

The Ukrainian economy is near collapse, leaving Naftogaz without the funds needed to pay its monthly gas debt, due on the seventh of each month.

Gazprom had warned in early June that Ukraine was not holding enough gas in its storage facilities while contractual violations loom, creating the conditions for another gas crisis for Europe.

Jose Manuel Barroso, the president of the European Commission, has said Europe does not have rescue funds available for Kiev in its budget, and Russian Prime Minister Vladimir Putin said the same of Moscow.

Meanwhile, the economic recession has hit Gazprom with cash shortages and declining revenue as European gas demand declines, which could become even worse if Ukraine pulls back on exports.

Analysts at the gas-market consultancy ICIS Heren said European utilities face their own shortages as the Russian-Ukrainian row trickles downstream, The Times of London reports.

"Gas storage levels are way below where they were at this time last year," said ICIS Heren's Louise Boddy. "We will either get floods of Russian gas coming into Europe or no Russian gas."