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Russia's Gazprom has demanded that Ukraine pay a fine of around
Russia's Gazprom has demanded that Ukraine pay a fine of around $530 million for its failure to import the contracted volume of natural gas, business daily Kommersant Ukraina reported on Monday.

The paper cited an unnamed source in the Russian gas monopoly as saying the company sent official notification of the fine to the Ukrainian state oil and gas company Naftogaz last week.

The demand comes despite pledges from both Gazprom and Prime Minister Vladimir Putin in March that Moscow would not seek reparations from Ukraine for the low import level.

The source said the fine would apply to supplies in March, when Ukraine was obliged to buy 2 billion cubic meters of gas, but bought only 0.9 billion cu m. Under the contract, the supplier has the right to demand reparations totaling 150% of the value of the import shortfall during the October-March period, and 300% during the rest of the year.

For the first quarter as a whole, Ukraine imported roughly half the level stipulated in the supply contract.

The dispute has had a knock-on effect on Russia's gas dealings with Turkmenistan, the paper said. Most of the gas sold by Gazprom to Ukraine is bought from the Central Asian country and piped through the Russian grid.

Supplies from Turkmenistan to Russia were halted after an explosion on the Central Asia-Center-4 pipeline in the early hours of April 9. Turkmenistan blamed the explosion on Gazprom, saying the company had reduced the volume of gas taken at the Russian end by 90% without informing the Turkmen side. The surplus gas reportedly caused an increase in pressure, which burst the pipeline.

Speaking on March 12, Putin gave assurances that Russia would not fine Ukraine.

"Ukraine is currently not buying the volume of gas from us that it was contracted to do, and should pay a fine for this. We are waiving this fine, based on realities - they can't pay. They are now on the verge of bankruptcy, and you perfectly understand that you cannot finish off your partners," the prime minister said.

However, less than two weeks later Putin issued an angry statement over a deal between Ukraine and the European Union, under which the EU agreed to provide up to $5 billion to modernize Ukraine's gas pipeline system.

Russia froze intergovernmental talks with Ukraine and threatened to review ties with the EU, saying Moscow's interests had been ignored in the deal.

Ukraine has been hard hit by the global economic crisis, with unemployment doubling, the economy shrinking by at least 25% in the first two months of 2009 alone, and demand collapsing for the country's main exports, steel and chemicals. The national currency, the hryvnia, has lost around 40% of its value.

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