Gazprom threatens to cut Ukrainian gas supplies

Russian energy company says cut will endanger European energy security.

By Daniel J. Graeber

MOSCOW, Feb. 24 (UPI) -- Russian energy company Gazprom said Tuesday it may halt natural gas deliveries to Ukraine within two days because of late payments.

Ukraine's natural gas contract with Gazprom calls for a pre-payment mechanism. Unless a payment registers in the company's account within two days, Gazprom Chief Executive Officer Alexei Miller said the spigot would be closed.


"The supply of gas to Ukraine at the ordered amount ... will result in a full stop of Russian gas supplies to Ukraine, which creates serious risks to gas transit to Europe," he said.

Gazprom in the winters of 2006, 2009 and 2014 cut gas deliveries through Ukraine briefly in response to contractual disputes with Kiev. That left downstream consumers in Europe short on natural gas supplies.

The row sparked concerns from European leaders over the influence Gazprom has over the regional energy markets, leading policymakers to create measures to deter companies from controlling natural resources and transit arteries. Azerbaijan has since emerged as a rival natural gas supplier for the European market.

Russian energy company Gazprom offered Ukraine some concessions on natural gas deliveries in exchange for agreements to settle outstanding debt. The Russian energy company again started leaning on Ukraine for payments after Kiev secured a $17.5 billion guarantee from the International Monetary Fund.


Ukrainian leaders said Monday draft budget plans for 2015 envision a reduction in debt held by national energy company Natfogaz.

The European market gets about a quarter of its natural gas needs met by Russia, though most of that runs through the Soviet-era transit network in Ukraine.

The latest payment row coincides with ongoing skirmishes between pro-Russian rebels in eastern Ukraine and government forces despite a mid-February cease-fire agreement.

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