EU Warns of Legal Action Over Gas

APAlexei Miller, left, looking at a gas transit map with Slovakia's Robert Fico, center, and Bulgaria's Sergei Stanishev at Gazprom's headquarters Wednesday.
The European Union remained without most of its Russian gas imports for an eighth day Wednesday, prompting its chief executive Jose Barroso to raise the prospect of legal action from European energy companies.

Russia and Ukraine, which is the transit country for 80 percent of Gazprom exports destined for the EU, continued squabbling for a second day about how to move the gas westward.

Proposals for dismantling the deadlock began emerging late in the afternoon after the prime ministers of Bulgaria, Slovakia and Moldova, among the countries hardest hit by the disruptions, spent a day of urgent talks in Moscow and Kiev.

President Dmitry Medvedev proposed that European gas-consuming countries dispatch their leaders to Moscow for a summit this Saturday.

Ukrainian President Viktor Yushchenko backed the idea but said the summit should be held in Brussels or Prague, which currently holds the EU presidency, his office said in a statement.

Gazprom chief Alexei Miller said Gazprom would replenish Ukraine's gas reserves with as much gas as the country sent to Slovakia and Moldova. He spoke after meeting with Slovakian Prime Minister Robert Fico.

The arrangement, however, won't work for Bulgaria, Miller said.

Bulgarian Prime Minister Sergei Stanishev said after talks with Prime Minister Vladimir Putin that he had brought proposals that could end the disagreements. It was unclear late Wednesday what they were.

Stanishev spoke after he, Fico and Moldovan Prime Minister Zinaida Greceanii met with Putin.

Putin supported some of the proposals put forward at the meeting and offered more ideas for restarting the transit, said Gazprom deputy chief Alexander Medvedev.

President Medvedev also scheduled meetings with the European prime ministers on Wednesday.

Konstantin Chernichkin / Reuters
A sign at a rally Wednesday at the Russian Embassy in Kiev reads, "Liars have always had their tongues cut out."
European Commission President Barroso said his commission would recommend that European companies seek legal redress if the Russia-Ukraine dispute continued. He called the standoff "most unacceptable and incredible."

Moscow and Kiev promised to resume deliveries to Europe under an EU-brokered deal signed Monday that deployed international monitors at gas metering stations to make sure none of the gas disappeared in transit. Gazprom and Naftogaz Ukrainy, however, have been haggling since Tuesday over technicalities concerning the supplies.

"Russia and Ukraine are showing they are incapable of delivering on their commitments to some member states," Barroso said during a debate on the gas dispute in the European Parliament in Strasbourg, France. "If the agreement is not honored, it means Russia and Ukraine can no longer be considered reliable partners for the European Union in terms of energy supply."

Meeting the visiting prime ministers, Putin again blamed Ukraine for blocking transit and suggested that the European Commission apply more pressure on Kiev.

"We are hearing from our Ukrainian colleagues and friends that they are having problems with the transit of our natural gas to you," Putin said. "But these are not our problems but the problems of the transit country. And they must solve these problems."

Misha Japaridze / AP
Sechin, left, Putin and Alexander Medvedev in talks with European officials.
Deputy Prime Minister Igor Sechin said Gazprom has lost $1.2 billion in potential revenues and extra costs since the start of the month because of the disruptions and the need to shut down some production wells.

President Medvedev earlier Wednesday put the losses at $1.1 billion in a meeting with Miller, asking the Gazprom chief to seek recovery of the money through courts. "Our country can't lose so much money," he said. "No more presents."

Since late Tuesday, Gazprom has increased the amount of gas it is trying to ship through Ukraine to 99 million cubic meters, adding Slovakia as a destination for the extra 22 million cubic meters of gas.

A major obstacle for gas exports to resume appears to be a disagreement between Moscow and Kiev about where the gas should enter Ukraine. Gazprom continued to insist Wednesday that its gas flow through its Sudzha metering station on the Ukrainian border, despite Ukrainian Prime Minister Yulia Tymoshenko reiterating Kiev's stance that this would be impossible. Gazprom's gas would collide in the pipeline with gas that Naftogaz is pumping in the opposite direction to supply three eastern regions of Ukraine, said Tymoshenko, who met with Fico and Stanishev in Kiev.

Naftogaz has offered to reroute Gazprom's EU-bound exports through two other Russian metering stations, Pisarevka and Valuiki, Naftogaz spokesman Valentin Zemlyansky said by telephone from Kiev.

Gazprom refused the offer, saying in a statement that those stations were primarily designed to send gas for Ukraine's domestic consumption.

If sent through the stations, Zemlyansky countered, "the gas wouldn't disappear but re-emerge in the west of Ukraine."

Before the disruptions, Gazprom used a total of four transit routes across Ukraine, including the ones that Naftogaz is offering, Zemlyansky said.

Other transit problems include insufficient pressure in the Ukrainian pipelines to carry Russian gas and who would cover the cost of the so-called technical gas required to power the transit stations in Ukraine.

Miller told President Medvedev that Ukraine wanted Gazprom to donate $700 million worth of gas through March in order to be able to resume transit. He appeared to be referring to the technical gas.

Ukraine needs 21 million cubic meters of technical gas every day. Gazprom has refused to hand it over for free. Naftogaz chief Oleh Dubina on Wednesday seemed to change tack, saying the company was willing to borrow the gas.

"Lend us the gas if you have the opportunity," Dubina said at a news conference in Kiev. "After we agree how much it costs, we will pay you for it."

Ukraine still doesn't have a contract with Gazprom to import gas this year because the sides have not been able to agree on the price.

Members of a Ukrainian youth group rallied outside the Russian Embassy in Kiev to call for gas supplies to be turned back on. They waved Ukrainian flags and held posters depicting Putin with his tongue sticking out and reading, "Liars have always had their tongues cut out."

The EU made it clear that it did not care which country would cover those costs. "Our observers are noting the use and transit of every drop of gas, and gas being used for technical reasons is going to be well documented," said Ferran Tarradellas Espuny, the EU energy spokesman.

"We had no obligation to put monitors on the ground at our expense, but we have EU citizens suffering in the cold, so we honored [Russia and Ukraine's] condition for renewing gas supplies, but they haven't been renewed," he said.

Jessica Bachman contributed to this report.