Russia Cuts Gas Supply To Europe

Ukraine's gas company Naftogaz said Tuesday that Russia's Gazprom slashed natural gas shipments to Europe by about two-thirds, while Balkan nations reported a complete shut off of Russian gas, in a sharp escalation of a struggle over energy that threatens Europe as winter sets in.

Bulgaria's energy ministry said Russian gas supplies to Bulgaria, Turkey, Greece and Macedonia were completely cut off Tuesday morning. Turkey's Energy Minister Hilmi Guler confirmed the cutoff of gas shipped through the Balkans.

Romania's gas transport company Transgaz said Gazprom ceased pumping gas into the pipeline in eastern Romania at 3 a.m. (GMT 0100) Tuesday morning.

The European Union issued a statement later Tuesday morning calling the sudden and substantial cut in supplies to some member states "completely unacceptable."

The 27 member states demanded that supplies be restored immediately.

Bulgarian pipeline operator Bulgargaz CEO Dimitar Gogov said the reason for the suspension was not clear, but that his country's gas reserves were sufficient to cover needs "for a few days."

Gazprom officials could not immediately be reached for comment. Late Monday, it said it would cut the amount of gas it ships to Europe through Ukraine by 65.3 million cubic meters, or about 20 percent.

In Ukraine, Naftogaz spokesman Valentyn Zemlyansky said Tuesday that the shipments to European consumers had dropped to just 81 million cubic meters of gas, down from about 300 million in recent days.

"That is all they are sending, in several hours Europe will feel it," Zemlyansky told The Associated Press. He said he could not confirm that gas shipments had been cut off to the Balkans.

Gazprom had said it would cut gas shipments by the amount it accuses Ukraine of diverting from its transit pipeline network. Russia supplies Europe with about a quarter of its gas, 80 percent of which is shipped through Ukraine.

Kiev denies allegations it is stealing gas, saying Russia is to blame for the disruption because it refuses to supply the gas needed to run its pipelines, including the compressor stations that pump gas west.

Each side says the other is responsible for supplying the gas to run the pipeline network, but there is no way to sort out the conflicting claims. Details of the transit contract are secret.

The rapidly expanding crisis, now approaching its sixth day, could eventually result in disruption of supplies for consumers in Europe, where gas is used for heating and electricity generation.

Some European countries had already reported experiencing supply problems after Russia cut off supplies to its neighbor on Jan. 1 over pricing disagreements and outstanding debt.

Officials in Hungary and Bulgaria have said supplies from pipelines through Ukraine remained down.

Russia's latest reductions appear aimed at putting pressure on Ukraine, which is refusing to pay $600 million Gazprom claims it is owed.

Russia is also demanding an increase in the price Ukraine pays for its gas. Now, Ukraine pays Gazprom $179.50 per 1,000 cubic meters of gas, less than half of the average price European countries are expected to pay this year.

Ukraine, one of the largest consumers of gas in the world, says it has enough reserves to last for weeks.

During a similar dispute between Ukraine and Russia in 2006, which lasted just three days, several West European countries saw their gas supplies drop by 30 percent or more.

This time Gazprom's customers were better prepared, having built up substantial reserves.

While some Western analysts say Russia is using the current crisis to weaken Ukraine's government, Gazprom insists the dispute is purely a commercial matter.

Both nations have been hit hard by the global economic slowdown, neither seems to be in a position to afford a lengthy halt to the gas trade. Both say they are anxious to prove they are a reliable energy partner for the EU.