Europe fearful over gas supplies

European importers watch for falling supplies after Moscow stops gas passing to Ukraine.

    Gazprom says it wants Ukraine to pay $418 per 1,000 cubic metres of gas [EPA]

    Europe, where temperatures fell below freezing overnight, has enough gas stockpiled to manage without Russian supply for several days, analysts said.

    The row could raise new doubts about Moscow's reliability as an energy supplier and fuel suspicions in the West, already running high since Russia's war with Georgia last August, that the Kremlin is bullying its pro-Western neighbours.

    Though Russia denies politics is behind the dispute and says it is about prices and debts, the two former Soviet neighbours have clashed over a drive by Viktor Yushchenko, the Ukrainian president, to take his country into the Nato alliance.

    Czech visit

    Yuri Prodan, Ukraine's energy minister, was due to arrive on Friday in the Czech Republic, holder of the EU's rotating presidency, to reassure Europe about supplies.

    If talks between Naftogaz, Ukraine's state energy company, and  Gazprom, Russia's gas export monopoly, do resume, the gulf between their negotiating positions remains wide.

    Alexei Miller, the chief executive of Gazprom, said on Thursday that he wanted Ukraine to pay $418 per 1,000 cubic metres (tcm) of gas, compared with the $179.5 Kiev paid in 2008. Ukraine says the most it can afford to pay is $235.

    There are also disputes over the amount Russia will pay for the right to ship its gas to Europe via Ukraine, and the $2bn Gazprom says it has still not received from Kiev in gas arrears.

    Naftogaz says it has transferred $1.5bn of the outstanding debt to a Switzerland-registered gas trading company acting as an intermediary, but not the remaining $500m in fines imposed by Gazprom.

    Gazprom charges about $500/tcm to customers in the European Union, though that is likely to fall by up to half this year.

    Gas prices track oil and crude has plummeted in value.

    SOURCE: Agencies


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