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Russia Says Ukraine May Fail Europe's Gas Transit Obligations

Russia says Ukraine is having difficulties stockpiling its gas reserves, which could make it difficult for the country to fulfill its transit obligations to Europe this winter. Senior Russian officials are urging Europe to help Ukraine pay for its supply of reserve gas.

In a statement issued on his web site, Russian Prime Minister Vladimir Putin says there is a growing risk of new European supply disruptions because of Ukraine's apparent inability to pay for its supply of gas that is stored in underground storage tanks for domestic use.

Mr. Putin's spokesman, Dmitri Peskov, told reporters this could have consequences for Europe.

Peskov says if Ukraine does not pump gas into underground storage tanks now, then in the fall and winter, it will be extremely difficult for the country to simultaneously meet its transit obligations and domestic needs. The spokesman says the difficulty will be technical.

The Prime Minister's statement says it appears unlikely Ukraine will be able to make a payment due next month for current gas purchases. In addition, Mr. Putin says it is also unlikely Russia can realize a plan proposed by his Ukrainian counterpart, Yulia Tymoshenko, in which Moscow would pay Ukraine about $5 billion for transit fees five to seven years in advance. Among the reasons, he says, are that Ukrainian President Viktor Yushchenko has declared the plan illegal, and a recent EU-Ukraine pipeline modernization agreement makes it difficult to say who Russia's partners will be for future deliveries.

Mr. Putin is proposing that Russia will help organize credit for Ukraine if Europe goes along. His deputy, Igor Sechin, says Ukraine should store about 19.5 billion cubic meters of gas to make certain fuel transits to Europe will not be disrupted. Sechin explains the prime minister's plan.

Sechin says if our proposals are accepted and Europe will be interested in credit for Ukraine, then Russia will consider the possibility of participating in that pool.

But in Brussels, European Union Commission President Jose Manuel Barroso said EU budget problems make it difficult to help Ukraine.

Meanwhile, Ukrainian President Viktor Yushchenko told the Nezavisimaya Gazeta, a Russian newspaper, that his country's gas conflict with Russia is the result of lousy politics. He says January's deal with Russia negotiated by his political rival, Prime Minister Tymoshenko, raised the price of gas, but not transit costs.

Russian spokesman Peskov assures Europe that his country remains a reliable supplier of gas, but the continent lost confidence in Russia last winter and has begun considering alternative sources.