Ukraine and Russia engage in a bit of energy tit for tat

By Aussiegirl

Looks like there is a bit of an energy tit for tat going on between Ukraine and Russia:

MOSCOW (AFX) - Gazprom said it will cut natural gas supplies to Ukrainian consumers in retaliation for the loss of a large quantity of gas that Ukrainian officials say can no longer be retrieved from an underground storage facility.

In a statement, Gazprom said it has informed Ukrainian gas company Naftogaz that it will supply only 1.1 bln cubic metres of gas to the Ukrainian market by the end of this year -- around 10 times less than anticipated.

The decision relates to some 7.8 bln cubic metres of gas held in an underground chamber that Naftogaz says can no longer be retrieved due to technical problems.

The 1.1 bln cubic metres of gas that will be delivered represents payment for transit of Russian gas to European countries via Ukraine, the Gazprom statement said.

The two countries have been locked in a tug-of-war as the new pro-Western government of Ukrainian President Viktor Yushchenko has been seeking ways to reduce Ukraine's energy dependence on Moscow.

Gazprom depends on Ukraine as the transit route for 90 pct of its exports outside the former Soviet Union and pays for the transit in the form of cheap gas supplies to the Ukrainian domestic market.

Gazprom had asked Kiev to pay for the irretrievable gas at the price paid by European clients, but Naftogaz had judged the 1.2 bln usd price tag too steep.

Meanwhile back in Ukraine:

Ukraine Cuts Off Electrical Supplies To Russia
1 July 2005 (RFE/RL) -- Ukraine's national nuclear-power generator today suspended electricity exports to Russia.

Interfax quotes Yefim Vazheevskii, the finance director of Ukraine's Energoatom, as saying the exports were suspended due to an increase in the price at which it buys electricity for export.

The chairman of Ukraine's National Electricity Regulatory Commission, Valeriy Kalchenko, says the commission today decided to almost double the price at which Energoatom buys electricity for export to Russia.

Kalchencko says the decision was made based on calculations provided to the commission by the state enterprise Energomarket, which runs Ukraine's electricity market.

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