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Gazprom set to reduce gas supplies to Ukraine

Russian gas export monopoly Gazprom is due to reduce supplies to Ukraine from 0700 GMT on Monday, just hours after its chairman and Kremlin candidate Dmitry Medvedev won Russia’s presidential election.

Gazprom has often threatened to cut gas supplies during previous pricing disputes with former Soviet neighbors Ukraine and Belarus, but those threats have not materialized, except in the new year of 2006. That brief disruption cut supplies to Gazprom’s west European customers, making them wary of any hint of a new row. A quarter of Europe’s gas supplies pass through Ukraine. Last week, Gazprom said talks with Ukraine had failed and it had no choice but to reduce supplies by 25%. Gazprom says Ukraine owes it hundreds of millions of dollars for supplies in 2007 and has consumed gas in 2008 without any contract. “We have had contacts over the weekend, but I can’t say that they brought any positive result,” said Gazprom’s spokesman Sergei Kupriyanov. Ukrainian officials say the debt has been paid in full.

Ukrainian Prime Minister Yulia Tymoshenko said over the weekend she believed Moscow would refrain from cutting supplies, but did not say why. Both MoscowKiev have promised supplies to Europe will not be affected. Ukrainian President Viktor Yushchenko and Russia’s outgoing leader Vladimir Putin agreed last month to settle the gas debt and eliminate intermediaries in gas trade. But a subsequent visit by Tymoshenko to Moscow, viewed less favorably by the Kremlin, brought a new round of tensions with both Moscow and Ukraine and producing conflicting statements about the gas trade. (Reuters)