8 Jan 2009

Gas flow halted through Ukraine to Europe

10:24 am on 8 January 2009

Russia has stopped all supplies of gas to Europe through Ukraine and said it would restore supplies only after Kiev agrees to pay full market prices.

The Kremlin quoted Russian President Dmitry Medvedev as telling President Viktor Yushchenko of Ukrainian in an evening telephone call that: "There will be no discounts or preferences for Ukraine."

Ukraine, an ex-Soviet state with a large Russian-speaking population, has been paying prices below world levels for gas for a long time.

Russia reduced gas volumes to Ukraine on 1 January. The dispute is now much sharper than a similar disruption in January 2006.

Supplies of transit gas to Ukraine were suspended on Wednesday after Gazprom accused Kiev of tapping the flow.

However, Gazprom said it was increasing supplies to the European Union and Turkey via other routes. Europe depends on Moscow for a quarter of its gas supplies.

The two sides will meet in Brussels on Thursday. The European Union said they appear willing to accept monitoring by the EU of how much gas is entering Ukraine from Russia.