Russia reduces gas to Ukraine by a quarter

MOSCOW/KIEV (Reuters) – Russia’s gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research) reduced supplies to Ukraine by a quarter on Monday, just hours after its chairman and Kremlin candidate Dmitry Medvedev won Russia’s presidential election.

Gazprom pledged its exports to Europe would not be affected. A quarter of Europe’s gas supplies pass through Ukraine.

Gazprom has often threatened to cut gas supplies during previous pricing disputes with former Soviet neighbors Ukraine and Belarus, but the threat is materializing only for a second time after the landmark cut in the New Year of 2006.

That brief disruption cut supplies to Gazprom’s west European customers, making them wary of any hint of a new row.

“Gazprom is a reliable gas supplier, but we cannot and won’t supply gas without payment,” said Gazprom spokesman Sergei Kupriyanov. He said deliveries had been reduced by 40 million cubic meters a day.

Ukraine’s state energy firm, Naftogaz, confirmed that supplies had been reduced, but gave a different figure of 30 mcm a day. It also said the reduction was not significant and would have no impact on consumers in Ukraine.

By comparison, Gazprom supplies Europe with around 410 mcm a day and Ukraine gets 135 mcm a day.

Gazprom says it has failed to reach a compromise with Ukraine over a $600 million debt for previous supplies and is also concerned by the lack of any deal for deliveries in 2008.

Ukrainian officials say the debt had been paid in full.

Ukrainian President Viktor Yushchenko and Russia’s outgoing leader Vladimir Putin agreed last month to settle the gas debt and eliminate intermediaries in gas trade.

But a subsequent visit by Ukrainian Prime Minister Yulia Tymoshenko to Moscow, viewed less favorably by the Kremlin, brought a new round of tensions with both Moscow and Ukraine producing conflicting statements about the gas trade.