24 Dec 2008

Warning of gas supply disruptions to Europe

6:10 am on 24 December 2008

Russia has raised the prospect of more gas cuts to Europe over the winter.

First Deputy Prime Minister Viktor Zubkov said in a statement on Monday that disruptions to supply cannot be ruled out as a result of a dispute with Ukraine over non-payment of debts.

Gazprom maintains that Ukraine's state gas company Naftogaz owes it up to $US2.4 billion. The state energy company has warned of delivery cuts if the outstanding debt is not cleared.

Ukraine is a major transit country for Russian gas exports to the European Union. A dispute over gas prices led to a brief interruption of gas supplies in several EU countries in January 2006.

Last week, Ukraine repaid a debt of $US1 billion to Gazprom for gas pumped in September and October, but Gazprom warned on Friday it had no legal obligation to supply gas to the country if the debts were not paid in full.

The deadline for the signing of a new contract is 1 January.

Ukraine currently pays Russia $US179.5 for 1000 cubic metres of gas but Gazprom has warned that price could rise to $US400 for 1000 cubic metres from next year.