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Europe suffers gas cuts after Russia move
Updated: 2006-01-02 10:08

Germany's largest gas supplier, E.ON-Ruhrgas, warned there could be problems for big wholesale customers if the dispute dragged on.

Europe suffers gas cuts after Russia move 
Ukraine's President Viktor Yushchenko (L) and Oleksiy Ivchenko, head of state-run gas provider Naftogaz Ukrainy, stand in the control centre of Ukraine's pipeline operator in Kiev December 31, 2005. [Reuters]

"If the reduction in supplies should prove to be especially large or last for a long time or the winter turns out to be especially cold, then we will hit the limits of our capacities," chief executive Burckhard Bergmann said on Sunday.

German, Italian, French and Austrian energy ministers have made a joint appeal to Moscow and Kiev to keep gas flows steady and an emergency European Union meeting is due on Wednesday.

"Moscow and Kiev have to find a solution ... any negative action will shake Europeans' confidence in these suppliers," Benita Ferrero-Waldner, the EU's foreign policy commissioner said on German Deutschlandfunk Radio.

Italy already told gas importers, including Eni, at the end of December to buy as much gas as they were allowed.

Western-leaning Ukrainian President Viktor Yushchenko is trying to take his state into the EU and NATO. This annoys Moscow, which does not like the idea that its influence over the former Soviet Union might be waning.

Ukrainian officials say that is why the Kremlin is punishing Ukraine with a huge price increase while giving Moscow-friendly ex-Soviet states such as Belarus a much easier ride.

Yushchenko, struggling to live up his people's high hopes after the "Orange Revolution" a year ago, says Ukraine is prepared to pay more for its gas but will not agree to a big jump all at once. Moscow wants to raise the price to $230 per 1,000 cubic metres from the current $50.

Ukraine had threatened to retaliate by raising the rent that Russia's navy pays to use the Ukrainian port of Sevastopol as headquarters for its Black Sea fleet.

It also says it is entitled to skim off 15 percent of gas to cover transit fees, but Gazprom is accusing Ukraine of illegally siphoning off gas destined for Europe.

Ukraine still has gas thanks to reserves and the country's own modest output and officials say there is enough in store to see households through the winter.

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