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updated 03:33, Wed October 03, 2007

Russia's Gazprom Threatens to Decrease Ukraine Gas Deliveries if Billion-Dollar Debt Unpaid

RANDOM NEWS

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MOSCOW (AP) -- Russian natural gas monopoly OAO Gazprom said Tuesday that it will decrease supplies to Ukraine if its neighbor fails to pay more than $1.3 billion in debt this month.

The threat raised the specter of a renewed dispute between Russia and Ukraine that could affect European supplies, and it came amid uncertainty over the results of tense parliamentary elections in Ukraine.

State-controlled Gazprom said it had informed European clients about the matter Tuesday. Company spokesman Sergei Kupriyanov said Ukraine has taken no action despite repeated requests and warned that, with consumption rising as winter approaches, "if the debt is not settled in October, Gazprom will be forced to begin decreasing deliveries of natural gas for consumers in Ukraine."

The announcement triggered memories of a price dispute that saw gas supplies to the European Union drop briefly in early 2006 after Gazprom halted direct shipments to Ukraine.

The EU's executive body urged a "speedy settlement" of the issue. The European Commission said that Gazprom had informed it of the problem and "committed itself to honor all existing gas supply commitments to European companies, which were informed about intended measures vis-a-vis Ukraine."

Tuesday's warning referred specifically to cuts in supplies for Ukrainian users, But, during the previous dispute, Gazprom accused Ukraine of siphoning gas, leading to decreased supplies further west in Europe.

Gazprom supplies a quarter of the gas used by Europe, and the incident drove home Europe's dependence on Russia for energy.

Ukraine's Fuel and Energy Ministry had no comment on Gazprom's statement. The European Commission urged the parties to find a speedy resolution of the issue.

Gazprom and Ukraine ended their previous dispute with an agreement that nearly doubled the price Ukraine pays for gas, part of a series of price hikes instituted by Gazprom for former Soviet republics.

Gazprom said that it was simply bringing its rates closer in line with market prices, but some in the West accused Russia of using its energy supply as a political lever.

Gazprom's statement came as Ukrainian election officials neared the end of a vote count in a closely contested parliamentary elections pitting President Viktor Yushchenko and other Western-leaning forces against supporters of Prime Minister Viktor Yanukovych, who has warmer relations with Moscow and draws his backing from largely Russian-speaking eastern Ukraine.

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