21 Nov 2008

Russia pushes Ukraine on gas debt

8:25 pm on 21 November 2008

Russia has demanded Ukraine to repay a gas debt of $US2.4 billion, raising fears of a renewed dispute which could disrupt supplies to Europe.

Ukraine says it owed only half that amount to RosUkrEnergo, a trading company co-owned by Gazprom.

President Dmitry Medvedev says Russia needs to clarify the debt and recover it "on a goodwill or compulsory basis."

Russia cut gas supplies to Ukraine in 2006 for similar reasons for three days - sparking alarm across Europe, which is heavily dependent on Russian gas transported through a pipeline network running via Ukraine.

In the following years, Russia threatened again to cut supplies, but eventually the two countries reached last-minute agreements.

Both Russia and Ukraine have insisted that they want to avoid using intermediaries in the gas trade in the future, but they have not agreed on price.

Moscow has said that it prefers to switch to market tariffs for ex-soviet states and charge Ukraine around $US400 per 1,000 cubic metres of gas - more than double the current price.

The government in Kiev has argued in the past that it deserved to pay preferential tariffs as its pipeline network is an integral part of the system which allows the transport of Russian gas to European clients.