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Gazprom will cut gas supplies to Ukraine by 50% from March
Gazprom will cut gas supplies to Ukraine by 50% from March 4, it has announced.

The move comes after Russian President Vladimir Putin and Ukrainian President Viktor Yushchenko had seemingly settled the gas debt problem on February 12.

But Ukrainian Prime Minister Yulia Tymoshenko torpedoed the presidents' deal when she decided that the two intermediary companies, RosUkrEnergo and UkrGazEnergo, should be removed from the equation.

Ukraine's national oil and gas company, Naftogaz, stopped transferring gas payments to them in November last year. As a result, Ukraine owes Gazprom as much as $1.5 billion.

Putin and Yushchenko had agreed that in 2008 Russia would supply gas to Ukraine at the coordinated and very moderate price of $179.5 per 1,000 cubic meters, if Ukraine paid the accumulated debt.

They also agreed that RosUkrEnergo and UkrGazEnergo, together with their co-founders, Dmitry Firtash and Ivan Fursin, would be excluded from the gas supply scheme. They were to be replaced with two new parity ventures between Gazprom and Naftogaz, an importing company and an exporting one. The presidents instructed Gazprom and Naftogaz to work out the new supply scheme.

Tymoshenko was apparently displeased with a clause in the agreement granting the Russian gas monopoly a 50% stake in the importing venture and a 50% share of Ukraine's gas market. She insisted that gas should be delivered directly to Naftogaz, which would be the sole master of the Ukrainian gas market.

Russia and Ukraine seem unable to fulfill the agreements their presidents made in February. The new intermediary companies have not been established, and the Ukrainian government has not even submitted relevant proposals to the president. Nor has Ukraine paid its debts to Gazprom, in part because payments were to be made through RosUkrEnergo and UkrGazEnergo.

Late last week, Tymoshenko announced that the registration of UkrGazEnergo and its license to sell gas would be cancelled on March 1, making Naftogaz the only company responsible for gas supplies in Ukraine.

Unwisely, Gazprom has again resorted to ultimatums.

The statements made by its press secretary, Sergei Kupriyanov, sound only too familiar. He said that on March 3 Gazprom cut gas supplies to Ukraine by 25%, and later denied a report by Naftogaz that the gas giant had reduced supplies by a further 10%.

On March 4, Kupriyanov announced that supplies had been cut by another 25%.

But Ukraine is standing its ground. It accumulated enough gas before the latest battle to last it a month. Naftogaz also has a very "convincing" argument, which it used successfully in the 2005/2006 winter dispute - about 75%-80% of Gazprom's gas supplies to the European Union, Russia's main customer, run across Ukraine.

Naftogaz has also said it has the right to take "adequate and asymmetric measures to protect the interests of Ukraine's consumers."

On March 3, Yushchenko phoned Putin again to discuss the gas problem. Why can't the two countries settle this economic dispute without their presidents?

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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