Russia's Gazprom Shuts Off Natural Gas Supplies to Ukraine
Russia's OAO Gazprom cut off natural gas supplies to Ukraine after the country refused to pay more than four times 2005's rate for the fuel, deepening tensions between the two former Soviet republics.
State-run Gazprom, which supplies a quarter of Ukraine's gas and uses the country's pipelines to supply a quarter of western Europe's, began to shut off supplies to Ukraine at 10 a.m. local time today, Sergei Kupriyanov, a spokesman for the Moscow-based company, said on its NTV television network. ``The Ukrainian side is to blame for this. They rejected our offer.''
Ukraine has enough fuel stored to last four months, and both sides have said supplies to western Europe won't be affected.
Gazprom wants Ukraine to pay $230 per thousand cubic meters of gas, almost fivefold what it paid last year. Russian President Vladimir Putin, who campaigned against Ukrainian President Viktor Yushchenko a year ago in Ukraine's so called Orange Revolution, offered last night to delay the increase by three months if a contract was signed by midnight. Yushchenko refused, calling it ``economic pressure.''
``Putin hates Yushchenko and wants to break him down,'' said Sergei Markov, a political consultant who the Kremlin sent to Kiev in 2004 to help former Prime Minister Viktor Yanukovych in his unsuccessful campaign against Yushchenko.
A price increase to $230 per thousand cubic meters would have opposite effects on Ukraine and Gazprom. Ukraine's economic growth in 2006, forecast at between 5.5 percent and 7.5 percent, would at least halve, Anatoliy Kinakh, head of the country's Security Council, said last week. Gazprom's 2006 sales would swelled by $4.5 billion, Troika Dialog, a Moscow-based brokerage, said.