Russia demands more from Ukraine for gas; EU says supplies steady for now

05 January 2009

Russian gas company Gazprom has hiked its prices for fuel sold to Ukraine over the weekend, deepening the dispute that resulted in a halting of supplies to Ukraine and disruptions to four other Eastern European countries.

The EU Commission says that there was no immediate danger to gas supplies to European Union industry or households as a result of the Russia-Ukraine gas dispute, while cautioning that the situation could change. On 1 January, Gazprom  shut off gas supplies to Ukraine as a result of a dispute over debts and pricing.

Europe imports around 25 per cent of its natural gas from Russia that is transported through pipelines running through the Ukraine, reports said.

Gazprom had initially offered to a rate of $250 per 1,000 cubic metres to Ukraine, which then countered Russia's offer with its own by asking Russia to pay more to ship fuel to Europe across its territory. Gazprom cutoff supplies on 1 January, having earlier said that its offer had expired. It then asked for a new price of $418 for the same volume.

Within two days, pressure in gas pipelines across Eastern Europe dropped just as it had during a previous pricing dispute between Russia and Ukraine in 2006. Around 30 per cent shortages were reported by Hungary, Romania, Poland and Bulgaria over the weekend.

Sunday saw Gazprom's chief executive Aleksei B Miller hike the demand from Ukraine to $450 per 1,000 cubic metres in January, according to the Interfax news agency.