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June 16, 2014

Russia Cuts Gas Supply to Ukraine

by VOA News

Russian energy giant Gazprom says it is cutting gas supplies to Ukraine following Kyiv's failure to meet a Monday deadline to pay nearly $2 billion of its outstanding debt.

Gazprom says Ukraine must now pre-pay for any natural gas after missing the deadline.

Also Monday, Gazprom filed a lawsuit in a Stockholm arbitration court to try to recover Ukraine's entire $4.5 billion debt.

Ukraine is a conduit for gas supplies to other parts of Europe.  Gazprom notified European countries that shipments through Ukraine will not be affected, but warned there could be a disruption if Ukraine decides to siphon off the gas.  A Gazprom spokesman said Ukraine's state-owned Naftogaz is obliged to make sure the gas reaches its European customers.

Russia and Ukraine have been embroiled in the energy dispute since April when Moscow nearly doubled the price of gas to Ukraine to $480 per 1,000 cubic meters.  Russia has since offered about a 20 percent discount, but Kyiv negotiators have sought a deeper price cut, closer to the original price.

The energy standoff is part of a larger geopolitical crisis spawned early this year by Ukraine's ouster of its Russian-backed president.  Moscow responded weeks later by annexing Ukraine's Crimean peninsula, despite widespread protests from Western governments.

Sunday's 11th-hour energy talks began as Ukraine concluded a national day of mourning for 49 Ukrainian service members killed when their military transport plane was shot down Saturday by pro-Russian separatists in eastern Ukraine.

The Ukrainian Defense Ministry said the Ilyushin-76 aircraft was about to land at the Luhansk airport.