Gazprom cuts gas supplies to Ukraine by 25% over debt dispute -3

Russia's state-controlled natural gas monopoly Gazprom cut supplies to Ukraine by 25% on Monday after failed talks on the country's unpaid debt.
(Adds Naftogaz, RosUkrEnergo statements in paras 3-7)

MOSCOW, March 3 (RIA Novosti) - Russia's state-controlled natural gas monopoly Gazprom cut supplies to Ukraine by 25% on Monday after failed talks on the country's unpaid debt.

"Gazprom reduced supplies by 25% at 10 a.m. Moscow time (7 a.m. GMT)," Gazprom spokesman Sergei Kupriyanov said, adding that shipments to European consumers were continuing in full.

However, Valentin Zemlyansky, a spokesman for Ukraine's national oil and gas company Naftogaz, told a news conference that the reduction in Russian natural gas supplies had been extended by 10% to 35%, or 46 million cubic meters.

"UkrTransGaz received official notification by phone at 9:35 a.m. local time [7:35 a.m. GMT] that gas supplies had been cut by 25%, or 38 million cubic meters per day. Another message has just arrived saying that gas supplies have been cut by another 10%, to 46 million cubic meters," Zemlyansky said.

Gazprom has not yet commented on the additional cut. Ukraine receives 135 million cu m of gas per day from Russia.

RosUkrEnergo, a Swiss-registered gas trading company co-owned by Gazprom, said Ukraine's natural gas import monopoly UkrTransGaz would not be affected by the cut, which applies to Naftogaz only.

"In connection with Gazprom's move to cut natural gas supplies to Ukraine by 25%, RosUkrEnergo considers it necessary to clarify that the full volume of the reduction will affect primarily Naftogaz," and not UkrGazEnergo, said Andrei Knutov, spokesman for the trader.

In late February, Russia's gas monopoly threatened to cut shipments on March 3 if Ukraine, a major transit country for Russian gas to Europe, failed to pay off the debt and approve a new scheme for future supplies.

"Gazprom is a reliable supplier, but it cannot deliver gas without payment," Sergei Kupriyanov said. "The debt for gas supplied to Ukraine has not been repaid yet. Ukraine is continuing unauthorized gas consumption. New contracts have not been signed."

Kupriyanov said around 1.9 billion cu m of gas worth some $600 million had been illegally consumed by the ex-Soviet state.

Ukraine said earlier it had paid over $1 billion to Gazprom to clear its debts for Russian supplies in 2007. Kiev owed Russia a total of $1.5 billion, which puts the current debt at about $500 million.

Under an agreement reached between Presidents Vladimir Putin and Viktor Yushchenko on February 12, Gazprom and Naftogaz are to switch to direct cooperation without intermediaries, which Ukraine blames for allowing the debt to accumulate, and to set up two joint ventures.

A bitter gas pricing row between the former Soviet allies led to supplies to Ukraine being briefly cut at the start of 2006. Supplies to Europe, which buys a quarter of its gas from Gazprom, were also affected.

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