Russia pumps more gas to Europe

Russia says deliveries of gas to European customers were back to normal on Tuesday as its energy officials prepared to meet counterparts from Ukraine to discuss a dispute that hit supplies across the continent.

    Moscow's dispute with Kiev over gas price was unresolved

    Russia was piping extra gas to European states after its decision at the weekend to cut off deliveries to Ukraine led to complaints from countries across Europe who suffered disruptions to their own supplies.

    Moscow's dispute with Kiev over a fourfold rise in the price for its gas was unresolved, with Russia telling Ukraine it had no right to tap supplies for its own needs, and accusing Kiev of stealing gas intended for other European customers.

    Supplies to Europe were hit because most of its Russian gas is piped across Ukrainian soil.

    Germany's E.on Ruhrgas said its supplies from Russia were back to normal, echoing statements from gas companies in Italy, France, Romania, Hungary, Poland and Austria.

    But events in the past 36 hours sent a chill through capitals and energy markets, with some analysts saying the disruption had hurt Russia's credibility as a dependable supplier of energy.

    Wholesale prices

    Oil prices edged higher on Tuesday as consumers feared the row could yet crimp fuel supplies to Europe. In Britain - Europe's only major, freely traded gas market - wholesale prices rose as much as 8% on Tuesday.

    Solana (R) urged Russia and
    Ukraine to resume talks

    European Union foreign policy chief Javier Solana had telephoned senior Russian and Ukrainian officials to urge them back to the negotiating table, his spokeswoman said.

    Russia said the increase simply brought prices in line with market rates, while Ukrainian officials have argued that the Kremlin was using the issue to undermine the Kiev government ahead of parliamentary elections in March.

    Ex-Soviet Moldova, which has pulled away from Moscow's orbit like its neighbour Ukraine, has also had supplies of Russian gas cut off. Moldovan officials said they too had a delegation in Moscow on Tuesday for talks.

    Siphoning off?

    Russia's state-run Gazprom claims that Kiev was siphoning off gas intended for piping onward to customers in the EU.

    Kiev has denied taking Russian gas but said it would do so if temperatures fell below freezing. It says it is currently using gas from another ex-Soviet state, Turkmenistan.

    Gazprom cut supplies to Ukraine after Kiev rejected demands it pay four times more for its gas - a sharp break with subsidised prices rooted in Soviet times.

    Europe receives a quarter of its gas from Russia. Since Soviet times, Moscow has promoted itself as a reliable supplier - an image it seeks to enhance as current chairman of the G8 group of industrial nations.

    Gazprom has said it will pipe an extra 95 million cubic metres of gas a day to Europe via Ukraine to make up for the volumes it said Ukraine was siphoning off.

    On Sunday, it cut volumes going along that route by 120 million cubic metres a day, the amount Ukraine had been buying.

    Analysts said EU nations now could not do much to lessen their dependence on Russian energy because there were no readily available alternatives.

    SOURCE: Reuters


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