With a deadline of January 1 looming, Russia and Ukraine seem to have reached a stalemate in their attempts to settle a dispute over gas prices. Russia’s natural gas monopoly Gazprom has threatened to cut off shipments to Ukraine if Kiev refuses to accept a quadrupling of the price.
Up until now, Ukraine has received cheap gas from Russia in return for Russia having access to Ukraine’s pipeline network to transport most of its gas exports to Western Europe. Increasing the pressure, Gazprom says it has bought up all the gas that will be exported from Turkmenistan in the first three months of next year – that is gas which otherwise Ukraine would have been able to purchase. Russian President Vladimir Putin said the impasse has led to a “real crisis” in relations between the two countries. Ukrainian President Viktor Yushchenko was quoted by Russia’s Itar-Tass news agency as saying the planned price hike is “provocative”. Yushchenko reportedly has offered to pay a much lower price rise of only 50 to 60 per cent, phased in over the next five years. Western Europe is following the crisis closely as around a fifth of European gas supplies come from Russia via Ukraine and it is feared there could be disruptions to shipments.