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Wednesday 17 September 2014

Putin warns Europe of gas shutdown

Published 10/04/2014 | 14:47

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Russian President Vladimir Putin is putting pressure on Europe over gas supplies

Russia's President Vladimir Putin has sent a letter to 18 European leaders urging them to offer quick financial assistance to Ukraine to prevent a shutdown of Russian natural gas to much of Europe.

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In a letter released today by the Kremlin, Mr Putin warned that Ukraine's mounting gas debt is forcing Moscow to start demanding advance payments for Russian gas supplies.

He warned that if Ukraine fails to make such payments, Russia's state-controlled gas giant Gazprom will "completely or partially cease gas deliveries".

Mr Putin told the leaders that a possible shutdown of Russian gas supplies will increase the risk of Ukraine siphoning off gas intended for Europe and will make it difficult to accumulate sufficient reserves for next winter.

Mr Putin "expressed his utmost concern" about the growing gas debts, which Moscow says are more than 16 billion dollars (£9.6bn).

The move is designed to exert economic pressure on Europe, which receive a large portion of its gas from Russia through Ukraine.

Mr Putin has tightened the economic screws on the cash-strapped Kiev government since it came to power in February, when its Russia-leaning president fled the country after months of protest.

The move raises the spectre of gas disputes between Russia and Ukraine in 2009, when Moscow turned off supplies to Kiev and other European countries.

Prime Minister Dmitry Medvedev said on Wednesday that the Kiev government owes Russia 16.6 billion dollars, mostly for missed gas payments. Last week, Russia state energy giant Gazprom said it would be scrapping all discounts on gas to Ukraine, meaning a 70% price rise that will add to that figure.

Russia had already eliminated a gas discount it had given Ukraine, arguing that it was tied to a lease for Russia's Black Sea Fleet base in Crimea.

And Ukraine has promised the International Monetary Fund that it will cut energy subsidies to residents in exchange for a bailout loan of up to 14 billion dollars (£8.4bn). That means gas prices were set to rise 50% on May 1, even before the latest salvo from Mr Putin.

Press Association

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