Tymoshenko Says Gas Won't Be Cut

ReutersTymoshenko arriving for a news conference Saturday in Kiev, where she said Gazprom would not carry out its threat.
There will be no cutoff of Russian gas to Ukrainian consumers, despite Gazprom's threat to reduce volumes Monday over payment arrears and contractual issues, Ukrainian Prime Minister Yulia Tymoshenko said Saturday.

Tymoshenko's remarks came two days before a Gazprom deadline, when it says it will reduce supplies unless outstanding issues are settled.

"I am certain that there will be no cutoff of gas. Ukrainians will be able to use gas without a fuss. No one is going to cut off anything," Tymoshenko told a news conference.

Tymoshenko, long an opponent of intermediaries in the gas trade, said one such go-between, UkrGazEnergo, would no longer distribute imported gas to Ukrainian consumers from Saturday. That would now be done by state oil and gas company Naftogaz Ukrainy.

"We have decided firmly that not a single cubic meter of gas will be supplied through anyone other than Naftogaz," she said. "I believe Russia will be conciliatory toward Ukraine and form relations with no middlemen. ... I have always believed that there should be no intermediaries, no short-lived corporations. We have Gazprom and Naftogaz. Let's sign an agreement and buy gas."

Tymoshenko said that "as of March 1" UkrGazEnergo "won't exist in Ukraine," RIA-Novosti reported. On Feb. 22, Tymoshenko ordered her government to cancel an agreement with UkrGazEnergo. The gas trader is owned in equal parts by Naftogaz and by Swiss-registered RosUkrEnergo, which in turn is half-owned by Gazprom, the other half belonging to two Ukrainian businessmen.

Despite payment of some arrears by Ukraine last week, Gazprom said conditions, including the conclusion of a 2008 supply agreement, had not been met and that its threat remained in force.

"Given that the situation hasn't progressed from stalemate, Gazprom will cut supplies to Ukrainian consumers by 25 percent at 10 a.m. on March 3 to safeguard its economic interests," Gazprom spokesman Sergei Kupriyanov said in a statement Friday.

"The European Commission and our European partners were apprised of the situation in a timely manner," Kupriyanov said.

Both sides have said the dispute will have no effect on supplies transiting through Ukraine to Western Europe.

EU Energy Commissioner Andris Piebalgs "has called on both sides to reach as quickly as possible an agreement that we hope is definitive," his spokesman, Ferran Tarradellas Espuny, said Friday. The spokesman said the agreement should be "long-lasting."

Tarradellas Espuny said the EU was monitoring gas supplies through its network of energy security correspondents."We expect that supplies to Europe should not be affected,'' the spokesman said.

Ukrainian officials, including President Viktor Yushchenko, last week said Naftogaz had settled its gas debt for 2007, which Gazprom has put at $1.5 billion.

Yushchenko and President Vladimir Putin agreed last month in Moscow on settling arrears and, over time, on doing away with intermediaries. RosUkrEnergo, a second go-between, delivers gas from Russia to Ukraine.

But during a later trip to Moscow by Tymoshenko, who is viewed less favorably by the Kremlin, it was clear no deal had been reached.