Ukraine, Russia face March gas crisis

10:52, 26 February 2009
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Gazprom has warned it will again cut off gas to Ukraine

Russian energy giant Gazprom has warned it will again cut off gas to Ukraine on March 8 if the country does not pay back 400 million dollars of new debts, a newspaper report said Thursday, AFP reported.

The Kommersant daily said the head of Gazprom`s finance department, Andrei Kruglov, had warned a board of directors meeting the day earlier of his concerns about Ukraine`s ability to pay February`s bills.

"If 400 million dollars is not paid on March 7, then on March 8 once again we will have to cut off gas to Ukraine," an unnamed participant in the meeting quoted him as saying, the paper said.

Russia had cut off gas supplies to Ukraine on New Year`s Day in a row over non-payment of debts and new gas prices, a move that triggered Europe`s worst modern energy crisis.

A dozen European countries later found that their gas supplies from Russia, which transit Ukraine, had been cut off amid the standoff, prompting furious protests from the European Union.

The two sides finally signed a new contract on January 19 and Gazprom renewed the supplies.

But Ukraine`s state gas company Naftogaz already warned last week it might be unable to pay Gazprom due to a "catastrophic" spread of unpaid bills among its own domestic clients.

The country is currently battling a dire economic crisis and risks missing out on the next slice of an IMF loan -- its main foreign income this year -- due to budget problems.

A Gazprom statement released late Wednesday after the board of directors meeting said it had noted the "the status of gas payments by Ukraine?s business entities and Gazprom?s strategy for relationships" with Naftogaz.

"The management committee was entrusted with stepping up actions to implement the provisions of contracts for gas supply to Ukraine and for gas transit across Ukraine," it said.

However no mention was made of a specific date to cut off Ukraine if the new payments were not made.

AFP

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