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Today's paper. Last Updated: 02/16/2012

Gas Supplies Fail to Resume to EU

A European Union observer, center, looking at a computer screen at Gazprom's Sudzha pumping station near the border with Ukraine on Tuesday.
Denis Sinyakov / Reuters

A European Union observer, center, looking at a computer screen at Gazprom's Sudzha pumping station near the border with Ukraine on Tuesday.

Russian gas deliveries to the European Union failed to resume flowing through Ukraine as planned Tuesday, causing a flurry of mutual accusations, with Gazprom going so far as to accuse the United States of involvement in the disruption.

Gazprom said it began pumping gas toward Ukraine in the morning but that the country's transit system would not accept the fuel. Ukraine said it was unable to handle the gas on that particular route, calling Gazprom's choice of the entry point a provocation.

The EU, in turn, complained that its monitors — intended to improve the transparency of gas deliveries — were not allowed to access technical information both in Kiev and Moscow.

Ukraine re-signed an agreement Monday to allow international monitoring of EU-bound deliveries traversing its territory.

Gazprom was to have turned on the taps at 10 a.m. Tuesday, ending the worst supply disruption in EU history that has affected at least 20 European countries.

Eighty percent of the EU's Russian gas imports come through Ukraine.

When Ukraine first signed the agreement Saturday, it supplemented it with a declaration of its view of the conflict, prompting Russia to declare the document void, even as companies and homes were left without heat in much of southeastern Europe.

When Deputy Prime Minister Igor Sechin landed at the Brussels airport to deliver a new copy of the agreement to EU Energy Commissioner Andris Piebalgs' office on Monday afternoon, he said he felt sorry for the people who had been left without heat.

"I want to express my sympathy to the citizens of the European countries that suffered as a result of the so-called gas blackmail on the part of Ukraine," he said, Interfax reported.

Gazprom on Jan. 7 suspended exports traveling to the EU through Ukraine, saying Ukraine was keeping all the gas to itself. Ukraine denied the charge.

Monitors from the EU were in place at gas metering stations in Russia and Ukraine and at gas flow control centers in Kiev and Moscow on Monday and had complete access to the information they needed, said Philip Cornelis, head of the EU monitoring team.

Gazprom chief executive Alexei Miller ordered the company to send its monitors to Ukraine and neighboring EU countries right after the agreement signing ceremony in Brussels.

The initial deal fell through because Kiev supplemented it with a declaration that President Dmitry Medvedev said defied "common sense."
   
"It basically turned the agreement into a meaningless piece of paper," said Constantine Lusignan-Rizhinashvili, whose law firm DLA Piper advises Gazprom on legal issues. "Unfortunately, there was 1 1/2 days lost as a result of this move by the Ukrainians."

After a new round of talks, Kiev agreed to discard the declaration and re-sign the trilateral monitoring agreement.

Putin's spokesman Dmitry Peskov warned Monday, however, that further problems could erupt because at least one issue remained unresolved in the transit arrangement.

Ukraine insists that Gazprom has to provide gas to fuel the Ukrainian pumping stations that are engaged in the transit.

Gazprom pays a transit fee and will therefore not bear any extra costs, Peskov said in a conference call with reporters.

Gazprom spokesman Sergei Kupriyanov suggested in an e-mailed statement that Ukraine's national gas company, Naftogaz Ukrainy, buy this gas from Gazprom. Prime Minister Yulia Tymoshenko said later Monday that Ukraine would pay for the so-called "technical gas" as soon it signs an agreement for this year's overall supplies.

When transit disruptions are out of the way, Kiev and Moscow will have to face off in talks about deliveries to Ukraine.

Gazprom is asking for $450 per 1,000 cubic meters, a price that could break the backbone of the Ukrainian economy, which is fueled by energy-intensive metallurgy and chemicals industries.

Medvedev told Ukrainian President Viktor Yushchenko by telephone late Monday that Russia was ready to restart negotiations to supply Ukraine immediately.

Czech Prime Minister Mirek Topolanek called Prime Minister Vladimir Putin late Monday to discuss Russia's involvement in a possible EU loan to Ukraine, the Cabinet's press service said. Putin suggested Sunday that Ukraine draw a loan to pay for gas supplies from Russia.

Ukraine's presidential energy envoy Bogdan Sokolovsky said Gazprom paid too little for the transit of its gas and for storing it in Ukraine's underground facilities.

"This is ... a cease-fire, if you wish, to allow the resumption of transit," Lusignan-Rizhinashvili said about Monday's deal, speaking by telephone from Brussels.

"All other issues that have transpired as being in dispute remain," he said.

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