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Russia to restore Europe's gasDispute between Moscow, Ukraine remains unresolved
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YOUR E-MAIL ALERTSQUICKVOTEMOSCOW, Russia -- Russia has promised to restore full natural gas deliveries to European nations, but the dispute between the country's state-owned gas monopoly and Ukraine appeared to remain at an impasse. The Russian state-controlled company Gazprom on Sunday halted deliveries to Ukraine because Kiev had refused to meet its demands for a fourfold price increase. Gazprom said after the cutoff to Ukraine that it would continue shipping full supplies to its European customers, most of which goes through pipelines crossing Ukraine. But shortly after the reduction of gas going into the pipes, other countries began reporting pressure falloffs. (Full story) Russia accused Ukraine of stealing gas; Ukraine vigorously denied the charges. "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, according to the Reuters news service. "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." The latest accusations and denials underscored the still-unresolved dispute between Russia and its ex-Soviet neighbor over natural gas deliveries. Ukrainian President Viktor Yushchenko called the supply cut -- prompted by a pricing dispute -- "unacceptable." Ukraine's Foreign Ministry said the move by Gazprom amounted to economic "blackmail." Gazprom said it suspended the flow of gas to Ukraine after Ukrainian officials refused to sign a new gas-price agreement proposed by Russian President Vladimir Putin, the Russian news agency Interfax reported. (Read about the background to the dispute) "This is not a subject for discussion," Yushchenko said. "It (the new contract) is unacceptable, not because the price is so high but because it is unfounded economically." Gazprom, which supplies around one-third of Ukraine's natural gas, wanted to increased the price of gas from around $50 per 1,000 cubic meters of natural gas to $230 per 1,000 cubic meters of gas -- a fourfold increase. Ukrainian officials claim the price hike is an attempt by Russia to penalize the former Soviet republic for its Western-leaning foreign policy. "A scenario aimed at creating economic pressure and blackmail has started. It aims in the end at destabilizing Ukraine's economy and disrupting Russian gas supplies to consumers in Europe," the Ukrainian Foreign Ministry said in a statement late Sunday. Western Europe is watching the Ukraine-Russia battle anxiously because the same pipelines that take Russia's gas to Ukraine go on to Western Europe, supplying it with more than a quarter of its natural gas needs. The European Commission will meet this week to discuss contingency plans. Last week, Putin offered a last-minute compromise that called for gas prices to be frozen at the old level for the first quarter of 2006 if Ukraine agreed to price increases after that. Gazprom officials said they were told by Ukraine that they would not sign the compromise agreement. That offer expired at the start of the new year. A spokesman for Naftogaz, Ukraine's natural gas company, said Sunday there was enough gas for the immediate future to heat homes and power its industry. "Gas is not flowing at all through some transit routes, which can lead to a fall in pressure in all the pipelines and limit the overall supply of gas to Ukraine and Europe," AP quoted Eduard Zaniuk as saying. On Sunday, U.S. State Department spokesman Sean McCormack said Washington "regrets" the move by Gazprom. "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," McCormack said in a written statement. "As we have told both Russia and Ukraine, we support a move toward market pricing for energy but believe that such a change should be introduced over time rather than suddenly and unilaterally." CNN's Ryan Chilcote contributed to this report Copyright 2006 CNN. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report. 
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