Russia is attempting to normalise gas supplies to European nations after Germany warned that Moscow's dispute with Ukraine over deliveries could hurt its long-term credibility as an energy supplier.
Source:
SBS
3 Jan 2006 - 12:00 AM  UPDATED 22 Aug 2013 - 12:18 PM

However Russia's row with Ukraine over gas prices appears set to continue.

With winter demand already high, gas supplies through Ukrainian pipelines to Europe started to fall dramatically as a result of a Russian blockade, prompting Western fears about insecurity in the energy sector.

Russian energy giant Gazprom vowed to increase exports west after key importers such as Germany and France reported a drop in supplies.

"We have taken all necessary measures to supply Europe with gas according to contracts," Gazprom's deputy chairman Alexander Medvedev was quoted as saying by Russian news agencies.

"By tomorrow evening full supply to Europe in accordance with these contracts will be restored," he added.

Gazprom said it would lift supplies in its export pipeline by 95 million cubic metres a day.

It said the shortfall to European countries was caused by Ukraine "stealing" their natural gas, with pipelines running through the former Soviet country.

Ukrainian President Viktor Yushchenko on Monday met with ambassadors from the European Union, Japan and the United States to discuss the crisis, and said Kiev would call for international experts to arbitrate.

Price war

Russia cut its neighbour's gas supplies after the Ukraine rejected Moscow's demand for a fourfold price rise.

Despite Russia's promise to restore gas to Europe, Moscow has made it clear that it holds Ukraine responsible for the problem.

"With the aim of preventing a possible energy crisis caused by Ukraine illegally taking gas, Gazprom has taken the decision to deliver additional gas into the gas transport system of Ukraine," the company said in a statement.

"We stress that the additional delivery of gas is not designed for Ukrainian consumers but is meant for transit through the territory of Ukraine for delivery to consumers outside the borders of Ukraine."

Europe imports a quarter of its natural gas from Russia, with 90 percent of those supplies delivered via Ukraine.

Blackmail claims

Ukraine, which denies stealing any gas, accused Russia of blackmail, saying Moscow wanted to destabilise its economy.

Tiny Moldova, another former Soviet state that like Ukraine has shifted its attentions from Moscow to the West, said Russia had all but cut off its gas supplies, also because it refused to accept higher prices.

International condemnation

German Economy Minister Michael Glos, whose country is Russia's biggest gas customer, said Moscow must act responsibly and show it can be trusted as a supplier.

Washington has also bought into the fight, with strong words from the US State Department.

"Such an abrupt step creates insecurity in the energy sector in the region and raises serious questions about the use of energy to exert political pressure," State Department spokesman Sean McCormack said in a statement.

Winter supplies

Ordinary European consumers are unlikely to be affected in the short term, but any cut-off to industrial users could cause significant economic damage.

Western Europe, where demand is near peak levels because of freezing weather, imports 25 per cent of its gas from Russia, most of it via pipelines running across Ukraine.

German, Italian, French and Austrian energy ministers have urged Moscow and Kiev to keep gas flows steady and a European Union meeting is due on Wednesday.

The Kremlin says the dispute is a commercial matter.

Kiev says it as an attempt to undermine its West-leaning government ahead of a hotly contested parliamentary election in March.

President Yushchenko has called for a moratorium on price rises while negotiations continue.

The Western-leaning leader is trying to take his state into the EU and NATO to the irritation of Moscow, which deeply resents any loss of influence over the former Soviet Union.

Ukrainian officials say that is why the Kremlin is punishing them with a huge price increase while giving Moscow-friendly ex-Soviet states such as Belarus a much easier ride.