MOSCOW - Russia threatened Ukraine with sanctions over its gas debt on Wednesday but its gas monopoly Gazprom floated a compromise that could keep gas flowing to Kiev and ensure smooth transit to Europe after a January 1 deadline.
Russia and Ukraine are locked in a gas dispute, the fourth in four years, with Moscow warning it would cut supplies to Kiev from next year if Ukraine does not pay a debt for gas supplies, which Gazprom puts at $1.67 billion plus $450 million in fines.
European countries are watching the dispute nervously.
A previous dispute in 2006 briefly disrupted Russian gas supplies to the entire continent in the middle of winter, when Ukraine suspended transit to Europe, sending up spot gas prices.
"They should pay the money to the last ruble if they do not want their economy ultimately to face sanctions by Russia," Russian President Dmitry Medvedev said in a televised interview.
"It is impossible to go on like that," he added without saying what sort of sanctions Moscow envisaged against Ukraine, which exported $15 billion worth of goods to Russia this year, including metals and heavy machinery.
There was no immediate comment on Medvedev's remarks by Ukrainian officials or the state energy company Naftogaz.
Moscow and Kiev are trading accusations daily in the latest gas clash. Both countries feel the dire effects of the global financial crisis on their markets and economies and continue to argue over the size of the debt and payment deadlines.
Nevertheless, Gazprom, Ukraine and industry analysts say the current situation is different from 2006 and that flows of transit gas from Russia, which covers a quarter of Europe's gas needs, won't be disrupted.
Over the past few months Ukraine has stockpiled a quarter of its annual gas consumption, meaning it can live on stocks without using transit gas even if Russia cuts supplies to Kiev for several months.
Analysts say that may ultimately prompt Gazprom to clinch a last-minute deal but worries persist and the European Union and the United States are calling on both sides to quickly settle the dispute.
COMPROMISE OFFERED
On Wednesday, Gazprom said Ukraine could avoid cuts in supplies on January 1 if it explains clearly how it will redeem its gas debt next year.
"We must have a clear understanding how we can get this money back," Gazprom's spokesman Sergei Kupriyanov told reporters when asked if the cuts could be avoided should Kiev fail to fully redeem the debt by Jan 1.
Medvedev also delivered a conciliatory comment: "Our goal is not to cut off anyone. Our goal to get our money back."
U.S. State Department spokesman Robert Wood said Washington was concerned that a gas cut could affect other countries.
"We want to make sure that customers for this natural gas are not impacted in any negative way, so that's why we want to see both Ukraine and Russia resolve this commercially and transparently," he said.
Gazprom said big gas stocks in Ukraine provided an additional guarantee of smooth transit of Russian gas to Europe even if Gazprom cut supplies to Ukraine itself from January1.
"I must say that this year the Ukrainian side has prepared well for the autumn-winter period... It means that there is technical capacity to ensure transit to Europe," Kupriyanov said.
Gazprom has in the past agreed to restructure Ukraine's gas debts. Kupriyanov said other options existed to settle the spat but ruled out Ukraine could sell Russia back gas from its stocks.
"Even in IKEA stores you have only 30 days to return a good. Our contract doesn't have this option," he said.
Russia and Ukraine are locked in a gas dispute, the fourth in four years, with Moscow warning it would cut supplies to Kiev from next year if Ukraine does not pay a debt for gas supplies, which Gazprom puts at $1.67 billion plus $450 million in fines.
European countries are watching the dispute nervously.
A previous dispute in 2006 briefly disrupted Russian gas supplies to the entire continent in the middle of winter, when Ukraine suspended transit to Europe, sending up spot gas prices.
"They should pay the money to the last ruble if they do not want their economy ultimately to face sanctions by Russia," Russian President Dmitry Medvedev said in a televised interview.
"It is impossible to go on like that," he added without saying what sort of sanctions Moscow envisaged against Ukraine, which exported $15 billion worth of goods to Russia this year, including metals and heavy machinery.
There was no immediate comment on Medvedev's remarks by Ukrainian officials or the state energy company Naftogaz.
Moscow and Kiev are trading accusations daily in the latest gas clash. Both countries feel the dire effects of the global financial crisis on their markets and economies and continue to argue over the size of the debt and payment deadlines.
Nevertheless, Gazprom, Ukraine and industry analysts say the current situation is different from 2006 and that flows of transit gas from Russia, which covers a quarter of Europe's gas needs, won't be disrupted.
Over the past few months Ukraine has stockpiled a quarter of its annual gas consumption, meaning it can live on stocks without using transit gas even if Russia cuts supplies to Kiev for several months.
Analysts say that may ultimately prompt Gazprom to clinch a last-minute deal but worries persist and the European Union and the United States are calling on both sides to quickly settle the dispute.
COMPROMISE OFFERED
On Wednesday, Gazprom said Ukraine could avoid cuts in supplies on January 1 if it explains clearly how it will redeem its gas debt next year.
"We must have a clear understanding how we can get this money back," Gazprom's spokesman Sergei Kupriyanov told reporters when asked if the cuts could be avoided should Kiev fail to fully redeem the debt by Jan 1.
Medvedev also delivered a conciliatory comment: "Our goal is not to cut off anyone. Our goal to get our money back."
U.S. State Department spokesman Robert Wood said Washington was concerned that a gas cut could affect other countries.
"We want to make sure that customers for this natural gas are not impacted in any negative way, so that's why we want to see both Ukraine and Russia resolve this commercially and transparently," he said.
Gazprom said big gas stocks in Ukraine provided an additional guarantee of smooth transit of Russian gas to Europe even if Gazprom cut supplies to Ukraine itself from January1.
"I must say that this year the Ukrainian side has prepared well for the autumn-winter period... It means that there is technical capacity to ensure transit to Europe," Kupriyanov said.
Gazprom has in the past agreed to restructure Ukraine's gas debts. Kupriyanov said other options existed to settle the spat but ruled out Ukraine could sell Russia back gas from its stocks.
"Even in IKEA stores you have only 30 days to return a good. Our contract doesn't have this option," he said.
