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Europe

EU Fears Domino Effect As Russia Cuts Gas to Ukraine

Russia has once again cut the supply of gas to Ukraine, which could affect deliveries further west. Western Europe buys most of its gas from Russia and it has to pass through Ukrainian pipelines to get there.

Orange gas pipeline

Both Ukraine and the EU are dependent on Russian gas

Ukraine may cut gas deliveries to Western Europe if Russia's gas giant Gazprom continues to tighten the tap on supplies to Ukraine, state gas company Naftogaz said Tuesday, March 4, in a statement.

Gazprom on Monday reduced Ukraine's gas supply by 25 percent, bringing the total supply to half its normal level. It said it would cut deliveries by another 25 percent at 5:00 pm GMT Tuesday.

Gazprom says Europe won't feel the crunch

"Naftogaz can only guarantee uninterrupted transit [of gas] to European consumers as long as it does not threaten Ukraine's energy security," said the company.

Pipes for an oil pipeline

Germany is planning a Baltic Sea pipeline to circumvent transit countries like Ukraine

European Commission spokesman Michele Cercone said Tuesday that Gazprom had promised that gas supplies to the European Union would not be affected.

"The Commission is concerned about the apparent reductions and urges both parties to go ahead in negotiations and quickly find a definitive solution to this commercial issue," added Cercone.

Some 80 percent of the EU's gas orders from Russia -- a quarter of its total gas supply -- flows through Ukraine.

Resolution elusive in gas impasse

The recent cuts are part of an ongoing conflict between Russia and Ukraine over gas prices and supply that began in early 2006. At that time, Russia tightened the tap when Ukraine refused to pay jacked up prices, which had a ripple effect on gas deliveries to Europe and sparked concern over Russia's reliability as a supplier.

Gazprom has said Kiev has some $600 million (395 million euros) in outstanding debts and has accused it of taking more than it pays for by siphoning off extra gas to sell to Western Europe.

Gazprom headquarters

Gazprom was partially re-nationalized under Putin

Ukraine, on the other hand, has said that Gazprom hasn't paid transit fees on gas passing through to the European market.

Energy clash splits Ukraine

Ukrainian President Viktor Yushchenko on Monday said that the conflict could escalate into a new "gas war" with Moscow. He had negotiated a new gas agreement with Russian President Vladimir Putin last month, but the deal had not yet been signed.

The conflict has split Ukraine's governing coalition, with Yushchenko and Prime Minister Yulia Tymoshenko taking different positions. According to reports, Yushchenko's deal with Putin may have collapsed after Tymoshenko's recent visit to Moscow.

Gazprom's chairman of the board, Dmitry Medvedev was on Sunday elected to succeed Putin as president, but it is unclear whether he played a role in the most recent gas cuts.

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