Russia says it will cut off Ukraine gas
(Reuters)
Updated: 2006-01-01 09:49

BROTHER NATION

Moscow says it will cut only that element of supply that would have been destined for Ukraine itself. Deliveries meant for Europe would continue at agreed levels.

Earlier in the Day, Putin, whose increasingly assertive foreign policy apppears aimed at regaining some of the influence Moscow has lost in former Soviet republics since the collapse of the Soviet Union in 1991, seemed conciliatory. Russia and Ukraine formed the industrial axis of the old Soviet superpower and ties between the two remain key to regional stability.

"Above all Ukraine is a brother nation and we must think about the whole relationship between Russia and Ukraine," Putin, betraying no emotion, told a meeting of his Security Council.

"Should there be no clear reply we will consider that our offer has been rejected," he said.

Graphic showing distribution of gas pipelines in Ukraine.[AFP]

Ukrainian officials accuse Moscow of using the issue to punish Kiev for its drive to join both the European Union and NATO a year after mass protests helped propel Yushchenko to an election victory -- beating a Kremlin-backed candidate.

A statement on Yushchenko's website (www.president.gov.ua) said he believed the two sides were ready to negotiate, but made no reference to the Kremlin proposal.

The president has put $80 as a fair price and says Gazprom varies rates considerably -- $120 for the Baltic states, $110 for ex-Soviet Caucasus states and $47 for pro-Russian Belarus.

Italian oil and gas firm Eni said it had been warned by Gazprom that supplies could be disrupted. Central European states set up contingency plans. Poland said it had at least a week's reserves of gas to guard against supply interruptions.

The EU has called a January 4 meeting of energy officials from its member states to work out a common approach.