Russia's &to=http://english.pravda.ru/main/18/89/357/15822_gas.html' target=_blank>OAO Gazprom natural gas monopoly raised the stakes Friday in a tense price dispute with Ukraine, saying it would fully shut supplies to Ukraine while continuing gas deliveries to European consumers if the two nations fail to strike a deal by year's end.
Gazprom wants &to=http://english.pravda.ru/main/18/89/356/16611_Ukraine.html' target=_blank>Ukraine to more than quadruple the amount it pays for Russian gas. Ukraine says such a huge increase would cripple its industries and imperil the struggling country's economic development.
State-controlled Gazprom, which supplies about half of the EU's gas, held an exercise in which CEO Alexei Miller practiced ordering a shutdown to Ukraine. In footage from Gazprom's operational headquarters that was broadcast widely by Russian television stations, Miller sternly ordered the company executives to "ensure uninterrupted supplies to European consumers."
About 80 percent of Gazprom's European exports pass through Ukraine, and Gazprom's deputy chairman Alexander Medvedev warned Ukraine against siphoning the gas intended for the company's European customer.
"We will fully deliver the amount of gas intended for Europe to the openings of Ukraine's gas pipeline system, and from that moment on responsibility will lie with Ukraine," Medvedev said at a news conference Friday. "If they make good on their threat to take unsanctioned gas, they will bear full responsibility for that."
He said that Ukraine's refusal to sign a deal for gas transit to Europe if the agreement on supplies is not signed would amount to "blackmail." It would also contradict the terms of the Energy Charter Treaty, an international agreement specifically banning the link between supplies and transit deals, Medvedev said.
Medvedev said tense talks were continuing on Gazprom's bid to charge Ukraine a European price of US$220-$230 (Ђ186-194) per 1,000 cubic meters, taking into account a Ukrainian transit fee.
Kiev, which had been paying US$50 (Ђ42), had rejected Gazprom's demand and said that the price could only be raised gradually over several years.
Late Friday, Ukrainian Prime Minister Yuriy Yekhanurov ordered officials to prepare to file an appeal with the Arbitration Institute of the Stockholm Chamber of Commerce, which acts as a neutral body for resolving East-West trade disputes. However, both parties to a dispute must agree to have the institute undertake a case.
Medvedev assailed Ukraine for its refusal to sell a stake in its pipeline system to Russia to help pay for the price hike. "Their arguments that they can't trade in national heritage can't be considered sound," he said.
Medvedev said that Russia would accept a 50-percent stake if the system is owned by two nations, or a smaller stake if Germany joins the deal.
He said that gas price for Ukraine could reach US$500 (Ђ422) and even US$700 (Ђ591) in the future based on the latest European market trends.
Gazprom officials insisted that the price hike for Ukraine and other ex-Soviet nations mark a financially justified break with Russia's Soviet past and transfer to free-market price mechanisms, but many Ukrainians see the move as a punishment for Kiev's pro-Western course under President Viktor Yushchenko.
Ukraine uses almost 80 billion cubic meters (104 billion cubic yards) of gas annually, receiving 25 billion cubic meters from Russia, and 36 billion cubic meters from Turkmenistan, pumped via Russia. Ukraine itself produces some 18 billion cubic meters.
Natural gas is one of the key export commodities for Russia, whose economy heavily depends on exports of natural resources, reports AP.
O.Ch.
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