Ukrainian President Viktor Yushchenko has told his Prime Minister Yulia Tymoshenko to urgently restart talks with Moscow after Russian gas export monopoly Gazprom halved supplies to Kiev in a pricing row.
"The only real way out of this is the continuation of talks," Yushchenko said in a letter to Tymoshenko.
While Ukraine's natural gas company has said there are no immediate plans to divert Europe-bound gas to Ukrainian customers, the European Union is closely watching the situation as the company has held out the possibility it could divert supplies if reserves run low.
Much of the Russian gas consumed in Europe comes in pipelines crossing Ukraine.
The Russian monopoly, OAO Gazprom, is demanding Ukraine sign documents resolving a $600 million debt dispute and enabling further gas deliveries. On Monday, it cut shipments by 25 per cent.
Gazprom spokesman Sergei Kupriyanov announced another 25 per cent cut yesterday and held out the possibility of more.
The European Union "looks to the parties to make every effort to find a rapid and durable solution to their disagreement. In addition, we look to both parties to ensure that gas supplies to the EU remain unaffected," EU Energy Commissioner Andris Piebalgs said in a statement.
A spokesman for Naftogaz, Ukraine's natural gas company, said yesterday that the company could begin diverting transit gas if a second cut were imposed. But after Kupriyanov's announcement, another spokesman said such a move was not in the immediate offing because of warm weather and substantial reserves.
Siphoning off Europe-bound gas would be a risky move for Ukraine, whose government is seeking closer ties with the West while trying to move out of Moscow's sphere of influence.
Gazprom portrays the cutoffs as a straightforward commercial dispute, but it has considerable political resonance.
Gazprom's chairman is Russian President-elect Dmitry Medvedev, and critics accuse the Kremlin of using Gazprom as an instrument of pressure. Russia has watched with irritation as Ukrainian President Viktor Yushchenko pushes for membership in NATO and the EU.
In a telephone conversation with Yushchenko yesterday, Medvedev urged Kiev to pay the debt, Medvedev's office said.
Medvedev told Yushchenko that Russia "expects an intensification of Kiev's efforts for the swiftest resolution to the problem of debt for gas that has been delivered," Medvedev's office said.
Only about one-quarter of the gas imported by Ukraine is of Russian origin; the rest comes from Turkmenistan and Kazakhstan in pipelines controlled by Gazprom. Naftogaz said that by going ahead with the threatened reduction, Gazprom would be cutting the Central Asian gas as well as Russian-origin gas — a move that "grossly violates technical agreements between the two companies."
Gazprom last month threatened to cut supplies to Ukraine over a $1.5 billion debt dispute, timed to coincide with Yushchenko's visit to Moscow. That cutoff was avoided by a last-minute agreement between Yushchenko and President Vladimir Putin.