14 Jan 2009

No relief yet for Europe in gas crisis

7:40 am on 14 January 2009

Russia started pumping gas meant for Europe via Ukraine on Tuesday for the first time in nearly a week, but the European Union says little or no gas is flowing to countries suffering urgent energy shortages.

Russia accused Ukraine of blocking gas to Europe, but Kiev blamed lack of pressure in the pipeline system and said it could not ship the gas without cutting off several of its own regions.

The crisis has disrupted supplies to some 18 countries at the height of winter.

Europe buys a quarter of its gas from Russia. A deal brokered by the European Union was meant to get supplies moving on Tuesday, with international monitors in place to ensure that Ukraine was not siphoning off any gas.

Russian gas company Gazprom said flows were "partially restarted" but then blocked.

Gazprom said it was declaring force majeure on exports to Europe, invoking a contractual clause that releases a supplier from its obligations due to circumstances beyond its control.

Ukraine told the European Union it was encountering "technical difficulties" because the pressure of gas arriving from Russia was too low.

The European Commission says Europe needs the gas urgently.

US blamed

Gazprom's deputy Chief executive Alexander Medvedev said Ukraine's actions were being orchestrated by the United States.

The US State Department dismissed the allegation as "bizarre" and "totally without foundation."

Russia cut off gas to Ukraine on 1 January after failing to reach an agreement with Kiev on gas prices. A week later it halted all transit flows to Europe via Ukraine, saying Ukraine was stealing gas intended for Europe.

Gazprom is demanding that Kiev hand pay $6US14 million in unpaid bills and pay $US450 per 1,000 cubic metres of gas in 2009.

This is similar to rates paid by European customers but a big rise on last year's price of $US179.5.