Russia-Ukraine tensions flare after EU gas deal

12:41, 25 March 2009
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The latest flare-up...

Russia shelved planned governmental talks with Ukraine after its West-leaning neighbour signed a gas network agreement with the European Union that prompted fury in Moscow, according to AFP.

The latest flare-up of Russian-Ukrainian tensions over an overhaul of Ukraine`s Soviet-era pipeline network has revived fears of a repeat of a gas dispute in January which left a dozen EU countries without energy supplies.

"The content of this declaration raises a number of questions to say the least," President Dmitry Medvedev said at a Russian national security council meeting also attended by his mentor, Prime Minister Vladimir Putin.

"Let`s postpone the consultations until we clarify the issue," Medvedev said. He said the two sides had planned to hold inter-governmental talks next week in Moscow.

Ukraine on Monday signed an agreement with the European Commission to pave the way for much-needed foreign investment in its gas pipeline network, drawing immediate fire from Putin, who described it as "unprofessional".

"It is clear that gas can only come from Russia," Putin told Medvedev at Tuesday`s meeting. "But nobody has discussed this issue with us."

The meeting between Russia`s ruling tandem followed the customary stylized routine of the pair exchanging questions and answers for the cameras.

"We should postpone the talks (with Ukraine) so that our intergovernmental contacts are productive," said Putin.

"So, the contacts will take place after the questions that have appeared on the Russian side are resolved," agreed Medvedev.

Speaking to reporters in Sochi Monday evening, Putin warned Russia would "review" its relations with the European Union if Moscow were left sidelined by the discussions in some of his angriest comments yet against the bloc.

He said it did not make sense to exclude Russia -- which sends some 80 percent of its gas destined for the EU through Ukraine`s Soviet-era pipeline network -- from the talks.

However Ukrainian Prime Minister Yulia Tymoshenko, who attended the Brussels EU meeting in a rare show of unity with her arch political foe President Viktor Yushchenko, emphasised that the agreement was not aimed against Russia.

"We know the Russian delegation did not quite like it," she told reporters in Kiev.

"But yesterday, Russia did not lose, Europe did not lose, Ukraine simply defended its national interests, its gas transit artery."

Russia, however, has long backed an idea of a consortium that would lease Ukraine`s gas distribution network.

In Berlin earlier this year, Putin in a meeting with senior representatives from energy firms such as Italy`s ENI, France`s Gaz de France and Germany`s E.ON proposed to create a consortium to mitigate the "risks of transit".

Paolo Scaroni, chief executive of ENI, which helps Russian natural gas giant Gazprom on the South Stream project to bring gas to Europe, proposed Tuesday to revive the idea of the consortium.

"We believe, and I think that other large companies such as E.ON and Gaz de France believe too, that it is necessary to return to the old idea of creating a consortium that would guarantee stable gas supplies," he said in televised remarks.

"To put it mildly, we were very much surprised by this working group because talking about increasing gas supplies without involving those who supply it and those who receive it is just a waste of time," he added.

Scaroni spoke during his meeting with Igor Sechin, Putin`s influential deputy in charge of energy, who said that only cooperation between consumers, supplies and transit states would guarantee "energy security".

Scaroni also joined Gazprom`s chief executive Alexei Miller in urging the construction of the South Stream pipeline, a project which may be threatened if investment were to be diverted toward Ukraine`s network.

"Considering the importance that the European Union attaches to diversifying ways of delivery from Russia, the earliest possible realisation of this project takes on particular urgency," Gazprom said in a statement following the meeting.

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