Russia and Ukraine have ended 2008 with an escalating dispute over gas deliveries through a key pipeline that supplies much of Western Europe.  Each side is blaming the other for the dispute.

A spokesman for the Russian gas giant, Gazprom, held up a letter at a Moscow new conference on New Year's Eve that he says was signed by the head of Ukraine's gas company. He says the letter threatened to cut off supplies flowing through a pipeline that supplies Western Europe with 25 percent of its gas.
 

Gazprom Deputy Chairman Alexander Medvedev speaks in Moscow, 31 Dec. 2008

Gazprom's deputy chief, Alexander Medvedev referred to the Ukrainian letter as blackmail and unprecedented in the history of the international energy business.  He added that Ukraine would be violating a contract it signed to continue deliveries to Western Europe through the end of 2010.   

Medvedev says Ukrainians did not respond when asked directly why they do not want to honor the contract.  He says Ukrainians insist there is no contract, even after they are shown signatures and laws, simply because they do not want an agreement.

A spokesman for Naftohaz, the Ukranian gas company, told VOA that its obligation extends only to a contractual framework for gas transit valid through 2013.  However, Valentyn Zemliansky says agreement on specific issues is reached on an annual basis.

Zemliansky says additional agreements cover the volume and quality of gas, as well as transit costs, and he notes that an agreement on these items for 2009 has not been signed.

Senior Gazprom officials have made conflicting statements about the status of Ukrainian payment of its $2 billion debt to Gazprom.  Gazprom chairman, Alexei Miller, says the funds have yet to appear in company accounts.  That statement came a day after Ukraine announced it had paid its obligations for November and December deliveries.  However, a deputy to the Gazprom chairman, Alexander Medvedev, says payment has in fact been received.

Gazprom Chairman Alexei Miller has said there must be an agreement for Russia to have a legal basis to continue gas deliveries to Ukraine after January 1.

Gazprom has been seeking to increase Ukraine's price for gas in the New Year to $418 per 1,000 cubic meters, more than double the current rate.

In 2006, Western European consumers noticed a drop in gas pipeline pressure after Russia cut supplies to Ukraine in a similar mid-winter payment dispute.  

Russian Prime Minister Vladimir Putin has warned that Ukrainian relations with Russia and the European Union will suffer serious consequences if Kyiv disrupts supplies to Western Europe.