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Europe

EU Urges Resolution to Ukraine-Russia Gas Dispute

The EU has slammed cuts in natural gas supplies to Europe and demanded that Moscow and Kiev find a solution this week.

A gas pressure gauge

A quarter of EU gas supplies come through Ukraine

Russia and Ukraine will reopen talks on natural gas shipments between the two countries, a senior Ukrainian official said Tuesday.

The talks will focus on ending a gas embargo imposed on Ukraine at the beginning of 2009 by Russia, as a result of failed negotiations on a new delivery contract, said Oleh Dubina, chairman of the Ukrainian natural gas monopolist Naftogaz Ukrainy.

Dubina said he would head a Ukrainian delegation traveling to Moscow, where they would meet with representatives from the Russian natural gas monopoly Gazprom.

"I spoke with (Gazprom chairman) Alexei Miller," Dubina said. "We will take up the discussions again on Thursday."

Gazprom and Naftogaz broke off talks on the last day of 2008 after failing to agree on a host of issues including gas pricing, transit fees, and contract terms for on-shipment of Russian gas to European markets duing 2009.

The break-down in negotiations led to a total Russian cut-off of gas supplies sent to Ukraine, and roughly a one-quarter reduction of Russian gas moving onward to Europe.

The EU depends on Russia for around a quarter of its total gas supplies, some 80 percent of which is pumped through Ukraine.

Moscow has since accused Ukraine of illegally removing gas transiting its country for clients further downstream in Europe. Ukraine denies stealing and has accused Russia of engineering the crisis.

Unacceptable

Earlier in the week, the two countries had come in for heavy criticism.

"This situation is completely unacceptable," said a statement from the EU's presidency, currently held by the Czech Republic, and the bloc's executive arm, the European Commission. "Without prior warning and in clear contradiction with the reassurances given by the highest Russian and Ukrainian authorities to the European Union, gas supplies to some EU member states have been substantially cut."

"The Czech EU Presidency and the European Commission demand that gas supplies be restored immediately to the EU and that the two parties resume negotiations at once with a view to a definitive settlement of their bilateral commercial dispute," the EU statement said.

"The Czech Presidency and the Commission will intensify the dialogue with both parties so that they can reach an agreement swiftly," it added.

Gas deliveries threatened

Snowy landscape

The crisis comes at a bad time -- the arrival of winter

Several eastern European countries have seen gas deliveries via Ukraine fall sharply in the last few days.

According to media reports, all supplies of Russian gas via Ukraine to Bulgaria, Turkey, Greece, Macedonia and were halted on Tuesday.

European Union member states Austria and Romania said deliveries were down 90 percent and 75 percent respectively, and German energy firms warned there could be gas shortages in Europe's biggest economy if the dispute dragged on and sub-zero temperatures persisted.

"Even our possibilities will reach their limits if these drastic cuts in shipments last and if temperatures continue to stay at very low levels," E.ON Ruhrgas Chief Executive Bernhard Reutersberg said.

Discrediting both countries

A Ukrainian worker as he operates valves in a gas storage and transit point in Boyarka, just outside Kyiv

Russia is switching off the gas

EU diplomats meeting in Brussels on Monday said that the row risks "discrediting" both countries.

At the emergency meeting of EU national representatives, "more and more countries" said that "Russia and Ukraine are discrediting themselves as reliable energy sources," an EU diplomat close to the talks told DPA news agency.

Some countries, especially those from central and eastern Europe who have seen fluctuations in their gas supplies since the Russian-Ukrainian row began, "said that it is more important than ever to diversify and pay more attention to energy security," the diplomat said.

The meeting stopped short of calling for concrete action, instead agreeing that the dispute is a purely bilateral commercial one, and not an issue in which the EU should try to mediate -- despite Ukrainian calls for EU involvement.

But diplomats also agreed that EU foreign ministers should discuss the issue further at an informal meeting in Prague on Thursday, the first time the issue has been passed to senior EU politicians, even on an informal level.

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