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Ukraine Threatened Again by Mid-Winter Russian Gas Cutoff

Russia's Gazprom energy monopoly is preparing to cut gas supplies to Ukraine if Kyiv does not repay a $2 billion debt by December 31. But Ukrainians dispute the Russian figure, and say they have enough supplies to last through the cold winter months.

Gazprom CEO Alexei Miller told Russia's Vesti 24 television the company has created an operations center to begin technical preparations for cutting gas supplies to Ukraine.

In a colorful turn of phrase, Gazprom spokesman Sergei Kupriyanov told a Moscow news conference Tuesday that Miller was in talks wielding a club in hopes of reaching a last-minute agreement with the Ukrainian side.

Kupriyanov says Gazprom has been seeking alternatives that would offer their Ukrainian colleagues another way of settling the debt, including advance payment by Gazprom to the Ukrainian gas company, Naftogaz of Ukraine, for gas pipeline transit rights through that country.

However, Oleksiy Hudyma, energy advisor to Ukrainian Prime Minister Yulia Tymoshenko, told VOA that Ukraine's current debt is less than $1 billion, because the second billion represents payment for December gas that does not come due until January 25.

He says the recent sharp devaluation of Ukraine's currency, the hryvna, has made it difficult for the country to pay the debt in U.S. dollars, adding that Russia is not so much interested in getting its money, but using energy to play politics.

Hudyma says Moscow is trying to influence Europe by suggesting Ukraine can interrupt its energy supplies and to make Europeans better appreciate the importance of Russia. He says Russia is also seeking control over Ukraine's gas transport system, adding that Gazprom's proposal to settle the Ukrainian debt by allowing the company to pay in advance for transit rights will leave Ukraine with no profit in 2009.

Hudyma and Gazprom both assure consumers in Western Europe that their gas supplies will not be cut, though for slightly different reasons. Gazprom spokesman Kupriyanov says Ukraine is obligated by contract not to reduce European supplies that transit through Ukraine, while energy advisor Hudyma says his country has enough reserves to supply itself and Europe at least through April.

Hudyma says there will be no harmful effects on Europe under any circumstances. If those circumstances become critical and Russia tries to limit supplies in a critical situation, he says Ukraine will get by on reserves that are stored underground.

Russia says it will charge Ukraine a market price of $418 per 1,000 cubic meters of gas. But Oleksiy Hudyma says that price is arbitrary, noting that the Czech republic pays only $350, though it is much farther downstream from Russia than Ukraine.

He adds that much of the gas Ukraine receives from Russia is mixed with cheaper supplies from Turkmenistan, for which he claims Russia does not yet have a contract.

Ukrainian and Russian representatives are all expressing hope for a last minute agreement.