Russia cut off gas supplies to Ukraine on Monday in a dispute over unpaid bills that could disrupt supplies to the rest of Europe and set back hopes for peace in the former Soviet republic.
After weekend violence that included the loss of 49 troops in the downing of a Ukrainian plane, Russia said Kiev missed a deadline for a $1.95 billion debt payment and it would now only get gas paid for in advance. It insisted that Ukraine must also ensure that it lets Russian gas flow through its international pipelines to Moscow's clients in the European Union.
Kiev and Moscow blamed each other for the failure to agree overnight on the price of future gas deliveries and refused to abandon well established positions: Russia offering a discount and Ukraine rejecting that as a tool for political manipulation.
"Thanks to the unconstructive position of the Ukrainian government, today a prepayment system was introduced," Alexei Miller, the chief executive of Russian state exporter Gazprom, told Prime Minister Dmitry Medvedev during a meeting at a government residence at Gorki, outside Moscow.
He said Ukraine had "adopted a position that can only be called blackmail," adding: "They wanted an ultra-low price."
Gazprom had asked Kiev to pay almost half its debt, which Moscow puts at more than $4 billion, by Monday morning or face supply cuts and the prospect of paying up front.
Ukrainian Prime Minister Arseny Yatseniuk accused Russia of deliberately blocking a deal to cause Kiev supply problems next winter, when temperatures plunge and heating needs increase.
"But it is not about gas. It is a general Russian plan to destroy Ukraine," Yatseniuk told a news conference in Kiev. "It is yet another step against the Ukrainian state and against Ukrainian independence."
Ukraine's Naftogaz company head Andriy Kobolev confirmed Russia had cut the supply of gas to Ukraine but added that Ukraine could manage without Russian gas until December.
The pipeline to Ukraine also carries gas meant for Europe, but Gazprom spokesman Sergei Kupriyanov said that the supply to Europe will continue as planned. Ukraine has the obligation to make sure the gas will reach European customers, he said.
But Gazprom has notified the European Commission of "a possible disruption in the gas transit" in case Ukraine decides to siphon off the gas, the company said.
The European Commission said in a statement that Ukraine was ready to accept a compromise in talks in Kiev of paying $1 billion now and more later, but Russia didn't accept the offer.
Sabine Berger, a European Union spokeswoman, said EU energy commissioner Guenther Oettinger remains committed to helping broker a deal between Kiev and Moscow.
"We stand ready to act as a mediator in these talks to facilitate a compromise, but for the moment, there are no new dates set," Berger said.
The gas talks broke down in Kiev in the early hours Monday, with the sides unable to reach agreement on price and on changes to a 2009 contract that locked Ukraine into paying the highest price in Europe.
Kiev wants to pay $268.50 per 1,000 cubic meters of gas — the price it had been offered when former Ukrainian President Viktor Yanukovich was in power. But, in a compromise last week, it said it would agree to pay $326 for an interim period until a lasting deal was reached.
Moscow had sought to keep the price at the 2009 contract level of $485 per 1,000 cubic meters but had offered to waive an export duty, bringing down prices by about a fifth to $385, broadly in line with what Russia charges other European states.
However, Kiev said that waiving the duty rather than agreeing a new contract price means Moscow could use the threat of canceling the waiver to keep Ukraine under its thumb.
Wire services
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