Energy crisis as gas row worsens between Russia and Ukraine

SWATHES of Europe have been plunged into an energy crisis after gas supplies to a number of countries were cut in an increasingly acrimonious dispute between Russia and Ukraine over energy prices.

Hungary, Turkey, Macedonia, Croatia and Greece all reported that gas flows via Ukraine had stopped, and even countries as far afield as Germany and Italy have experienced disruption to supplies.

In perhaps the worst-affected country, Bulgaria, the government has spoken about restarting a nuclear power station after the cut-off left 12,000 homes in one of the nation's biggest towns, Varna, without central heating and another major town without gas supplies.

"We are facing a serious natural gas crisis in which Bulgaria is a victim of the conflict between Russia and Ukraine," Bulgaria's prime minister, Sergei Stanishev, said.

The crisis was prompted after Vladimir Putin, Russia's prime minister, ordered the fuel giant Gazprom to cut supplies through Ukraine to punish the country for alleged theft.

Russia maintains that Kiev is siphoning off gas intended for export to western Europe, and claims its cut of 65.3 million cubic metres – about 20 per cent of the flow – is equivalent to the amount of gas its neighbour has taken.

As an indication of the increasing war of words between Moscow and Kiev over who is to blame, Russia has accused Ukraine of shutting down three pipelines, and labelled its behaviour "irresponsible".

However, these accusations have been fiercely denied by Ukraine, which acts as a transit country for 80 per cent of Russia's gas exports.

Kiev has pointed the finger of blame at Moscow, adding that Russia has cut supplies by about 60 per cent. Viktor Yushchenko, the president, has also warned Russia might order a total cut to supplies to the West.

The dramatic disruption to gas flows provoked a strong reaction from the European Commission. Moving away from the diplomatic niceties that had characterised its earlier statements on the Russian-Ukraine dispute, it called the cuts "completely unacceptable" and demanded an "immediate" restoration to supplies.

The commission added that it might hold an emergency summit between the EU, Russia and Ukraine in an effort to broker an agreement.

The events mark a major escalation in a dispute that began on New Year's Day, when Russia cut supplies to Ukraine over an argument about unpaid bills and how much Kiev should pay for its natural gas. Gazprom has demanded that Ukraine pays £308 for 1,000 cubic metres of gas, a significant increase on the 2008 price of £122 but one Gazprom says is in line with global prices.

Despite the animosity between the two sides, both Ukraine and Russia have pledged to seek a rapid solution to the dispute.

Oleh Dubina the head of Ukraine's gas company, Naftogaz, said he would travel to Moscow tomorrow for talks with Gazprom, while a spokesman for the Russian company, said that "given the crisis we are ready to talk at any moment".

Without a solution, ever greater areas of Europe could suffer from the effects of a gas shortage.

Slovakia, which like many of countries in Central Europe is 100 per cent dependent on Russian gas, said it was prepared to declare a state of emergency.

Centrica has warned British consumers might have to pay more if the situation persists.


BACKGROUND

THIS dispute marks a dramatic escalation in the row that began on New Year's Day, when Russia cut supplies to Ukraine over an argument about unpaid bills and just how much Kiev should pay for its natural gas.

Gazprom has demanded that Ukraine pays £308 for 1,000 cubic metres of gas, a significant increase on the 2008 price of £122, but one Gazprom says is in line with global prices.

Despite the animosity between the two sides, both Ukraine and Russia have pledged to seek a rapid solution to the dispute.

Oleh Dubina, the head of Ukraine's gas company, Naftogaz, said he would travel to Moscow tomorrow for talks, while Sergei Kupriyanov, a spokesman for the Russian company, said that "given the crisis, we are ready to talk at any moment".