Baseless and Bizarre

Europe Baffled By Broken Gas Promises (Gorst, FT)
Wednesday, January 14, 2009
Financial Times
By Isabel Gorst

The bitter gas dispute between Russia and Ukraine descended into near-chaos on Tuesday, leaving European Union diplomats baffled as promises to restart supplies fully were broken and Moscow suggested that the US had meddled in the affair.

In a potentially alarming twist on Tuesday night, Gazprom, the Russian gas company, said it was unable to meet its legal commitments to supply European countries with gas because Ukraine was allegedly blocking the flow across its territory.

Russia and Ukraine both defied terms of a contract agreed last weekend with the EU to allow an EU-backed monitoring mission to observe gas transit, leaving people in 18 countries across the continent with supply disruptions.

José Manuel Barroso, European Commission president, expressed “disappointment at both the level of gas flowing and our concerns about the access of our monitors”, in a telephone conversation with Vladimir Putin, the Russian prime minister.

Russia began the day by feeding small volumes of gas into a pipeline across Ukraine to the Balkans, but Ukraine refused to transit the supplies, citing technical reasons.
Alexander Medvedev, the deputy chief executive of Gaz­prom, said: “We believed the door for Russian gas was open, but again it has been blocked by the Ukrainians.”

He accused the US of encouraging Ukrainian action: “It looks like . . . they are dancing to music being orchestrated not in Kiev but outside the country.”

Oleh Dubyna, president of Naftogaz, Ukraine’s state gas company, said it was technically impossible to pump gas to the Balkans via the route proposed by Gazprom without cutting off supplies to eastern Ukraine. “We did not open the valve because there is no capability,” said Mr Dubyna.

A spokesman at the US embassy in Kiev rejected as “baseless and bizarre” Gazprom’s charge that the US had interfered in the dispute.

On Tuesday night, Mr Medvedev said Gazprom had declared “force majeure” on its gas exports to Europe and warned it would unleash its “entire legal arsenal” against Ukraine.

The latest twist in the dispute made a mockery of the EU-mediated agreement, experts said.
EU officials said the monitors had, after long delays, been given access to control rooms at gas dispatch centres but they would not predict when flows would resume.

Jonathan Stern, head of gas research at the Oxford Institute of Energy Studies, said Russian and Ukrainian statements were “all smoke and mirrors”.

“We should not be listening now to what Medvedev or Naftogaz tell us. We should be listening to the monitors,” he said.