Russia vows to restore gas flow to Europe

Julia Kollewe
The Guardian
January 12, 2009

Russia today vowed to fully restore the flow of gas to the European Union as quickly as possible, and blamed Ukraine for the crisis.

The two countries have signed a new agreement after a last-minute hitch yesterday, according to the Russian prime minister's office.

Spot gas prices in Britain fell on the news, trading down 5.5p to 61.75p per therm. However, forward prices rose on worries that another cold spell this winter could leave the system short, market traders said.

A deal acceptable to Moscow has been signed to allow independent monitors to track gas supplies from Russia to Europe through pipelines that cross Ukraine.

The head of Russia's state gas company Gazprom, Alexey Miller, and the Russian deputy prime minister, Igor Sechin, will be attending talks this afternoon in Brussels with EU energy ministers.

A spokesman for the Russian prime minister, Vladimir Putin, said: "Moscow has been informed that Ukraine has signed an acceptable agreement. We hope this is the case."

But he warned: "It will take a certain time before the pipelines can begin flowing again with natural gas."

Early yesterday Ukraine, Russia and the EU seemed to have reached agreement, but Moscow declared the deal void last night after Kiev attached additional notes.

Russia turned off the gas tap to Ukraine on 1 January amid a price dispute, and stopped supplying countries beyond Ukraine last Wednesday because it claimed Kiev was siphoning off the gas. Ukraine has denied this.

Russia supplies about a quarter of the European Union's natural gas, and 80% of it is shipped through Ukraine. The supply disruptions came as temperatures in many parts of Europe dropped well below zero. Eastern and central Europe have been worst hit, with thousands of businesses forced to cut production or even shut down and Slovakia saying it would restart a nuclear reactor it shut down last year. Slovakia's move prompted an angry response from neighbouring Austria.

Slovakia was on the brink of a power blackout today after a fire forced the partial shutdown of a coal power plant. "We are at the edge of a blackout," economy minister Lubomir Jahnatek said as he boarded a plane to Brussels for a meeting of EU energy ministers.

Energy companies in the Balkans, where temperatures dropped as low as -17C, have switched to alternative fuels and alternative imports to restore heating to hundreds of thousands of homes.

© Guardian News and Media Limited 2009