Russia cuts gas supply to Ukraine as talks fail

Russia cuts gas supply to Ukraine as talks fail

Europe is facing gas supply troubles after Russia decided Monday to cut gas supplies to Ukraine, which failed to broker an 11th-hour deal with energy giant Gazprom.

While the move does not immediately affect the gas flow to Europe, reports AP, it may mean a gas shortage for the region in the long-term.

Unlike it happened in April, the news failed to lift demand for coal. Cargoes for delivery in July to the European ports of Amsterdam, Rotterdam and Antwerp (ARA) were down 65 cents to $72.50 a tonne, according to the GLOBALcoal trading platform.

“Gas supplies to Ukraine have been reduce to zero,” Ukrainian energy minister Yuri Prodan said, according to a BBC report.

Russia cuts gas supply to Ukraine as talks fail

Ukrainian energy minister Yuriy Prodan, in March 2014. Image from Wikimedia Commons. 

Prodan’s statement came shortly after Russia’s state gas supplier Gazprom said it would only deliver gas to Ukraine that is paid for up front.

Russia and Ukraine have been locked for months in a contract row over gas arrears payments. Gazprom puts Ukraine’s unpaid gas bill at US$4bn and demanded that almost half of it be paid by today’s deadline or face supply disruptions.

This long-running gas dispute, which has stoked the worst East-West crisis since the Cold War, flared in April when Moscow nearly doubled its rates to $485 per thousand cubic metres, in the wake of a deadly winter uprising that pulled Kiev out of the Kremlin’s historic orbit for the first time.

Ukraine not only relies on Russia for the majority of its gas, but it also transports 15% of the fuel consumed in Europe.

Top image by snig | Shutterstock.com