Russia dramatically cuts flow of gas to Europe

In price dispute with Ukraine; Winter fuel shortage feared

MOSCOW - Russia's natural gas monopoly dramatically cut flows to Europe through Ukraine yesterday, sharpening fears of winter fuel shortages.

Despite warnings from the European Union, a pricing dispute between Gazprom and Ukraine showed no signs of letting up even as gas flows dwindled. As the two sides traded accusations and blame, negotiations remained frozen for the sixth day.

Bulgarian authorities said that two-thirds of their natural gas supply had been cut off and that consumption would be reduced to ensure provisions for key public facilities such as hospitals and schools. In a dozen other countries, governments said they could compensate with reserves or alternate sources in the short run.

Entrenched haggling over the price Ukraine would pay for Russian gas this year, and how much Moscow would pay Ukraine for allowing gas to cross the territory on pipelines bound for Europe, collapsed on New Year's Eve. Moscow first halted all gas flows to Ukraine, then began to scale back on European exports via Ukraine, accusing the smaller neighbor of stealing the gas intended for Europe.

The European Union gets about one-quarter of its natural gas from Russia. European customers first experienced a dip in supplies in 2006, when Russia turned off flows to Ukraine in another bout of price disputes. The repeated interruptions have raised anxiety across Europe about the reliability of depending upon Moscow for fuel.

Gazprom officials, who have urged Ukraine to restart negotiations, remained defiant yesterday. Gazprom's vice president, Alexander Medvedev, listed Russia as a victim of Ukrainian misdeeds, saying, "Russia, Bulgaria, and other Balkan countries have become hostage to Ukraine's unreasonable behavior."

Ukrainian officials deny siphoning off any of the European-bound gas, insisting they are tapping reserves to keep the country running. The head of Ukraine's state energy company was expected in Moscow tomorrow for renewed talks.

The European Commission in Brussels and the Czech government, which holds the rotating presidency of the European Union, called the situation "completely unacceptable."

"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," said a statement issued yesterday. "The Czech EU presidency and the European Commission demand that gas supplies be immediately restored to the EU and that the two parties resume at once negotiations."

The EU also announced that it would dispatch a delegation to meet with Ukrainian and Gazprom officials.

The standoff is playing out against a backdrop of increasing animosity between economically fragile Ukraine and oil- and gas-rich Moscow. Relations have been particularly tense over Ukraine's pro-Western government's ambitions to join NATO, which Russia regards as an encroachment on its border.

Hungary, Slovakia, Romania, and Poland had suffered the most, along with Bulgaria, officials at the office of the European commissioner for energy said. But the reduction of the supplies had not reached a critical level.

At a news conference yesterday, Bulgarian Prime Minister Sergey Stanishev said the morning cutoff had left the nation dependent on its Chiren storage facility, which provides about one-third of the country's normal daily consumption. He said natural gas supplies for central heating and for public establishments such as hospitals and schools would be a priority for the government.

He said Bulgaria had received no official warning of the termination of the natural gas supplies.

"It is not right to make Bulgaria a hostage in such a conflict," Stanishev said.

Croatia, meanwhile, is receiving only 20 percent of the usual supply of natural gas from Russia, officials said. Croatia's gas supply from Russia meets almost half of its daily consumption, the rest coming from domestic sources.

Deputy Prime Minister Jadranka Kosor insisted that the situation was under control.

"There is no need for panic, not even concern," Kosor told reporters. She added that there will not be any gas reductions to households in the foreseeable future because Croatia has its own gas reserves and is considering supplies from alternative sources.

In Greece, where winter is milder, the public gas company has assured consumers that there won't be any problems from the dispute, saying it has enough liquid reserves to cover the Greek market until Sunday.

In Italy, officials said they would seek to increase the flow from alternative sources.