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Putin Warns Ukraine, Europe On Transit Gas

The comments mark the first time Russian Prime Minister Vladimir Putin has hinted at new cutoffs since a supply crisis in January.
MOSCOW/KYIV (Reuters) -- Russia will cut natural-gas deliveries to Europe if Ukraine siphons off supplies crossing its territory, Prime Minister Vladimir Putin has said, in a warning that raises the specter of another gas dispute.

Putin's tough rhetoric followed assurances by his Ukrainian counterpart, Yulia Tymoshenko, that Kyiv would be able to meet its obligations to pay for Russian gas and deliver it to Europe after Moscow agreed to waive fines for reduced purchases.

"If they don't pay for gas supplies for internal consumption in Ukraine, they won't receive it," Putin said. "If they don't receive it, then it's likely they will siphon it from the export pipeline.

"As soon as siphoning begins, we will cut supplies. So don't come to us on the question of reliability."

Europe, reliant on Russian gas shipped via Ukraine for a fifth of its demand, is eager to avoid a repeat of a stand-off in January that severed shipments for more than two weeks at the height of a freezing mid-winter.

The likelihood of a repeat appeared to cool when Russia agreed to waive fines that it could have imposed on Ukraine for taking less gas than contracted in 2009, but Moscow has stepped up pressure on Kyiv in recent weeks.

Russian President Dmitry Medvedev, in an interview published by German magazine "Der Spiegel," said political infighting ahead of a Ukrainian presidential election in January was holding up payments for gas.

Putin echoed this line on November 11: "The financial means to pay are there. The IMF has confirmed this to us. The problem is that a preelection battle is happening there."

Ukraine plans to use money supplied by the International Monetary Fund (IMF) to help pay for Russian gas. Moscow argues that this finance, coupled with Russia's lenience on contracted volumes, should enable Ukraine to pay.

Prime Minister Tymoshenko, a front-runner in the elections, admitted that Ukraine had difficulty meeting its latest $500 million installment for October shipments ahead of the November 7 deadline.

But she told a meeting of ambassadors of Group of Eight nations on November 11 that cooperation with Russia would allow Ukraine to guarantee both payment for Russian gas and the transit of gas to the European Union.

"We have adjusted the volumes of gas for Ukraine and today we have Russia's solid position that there will be no fines. And in 2010, we have come to an agreement on supplies at the volumes of gas Ukraine needs," Tymoshenko said.

"We can guarantee that -- if such cooperation continues -- we will under no circumstances break our obligations to the EU in terms of transporting gas, nor our obligation to Russia on paying for gas that has been used."