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Russia-Ukraine gas talks collapse Russia-Ukraine gas talks collapse
(30 minutes later)
Talks to resolve a gas supply row between Ukraine and Russia have failed, the chief executive of Russian gas giant Gazprom has said.Talks to resolve a gas supply row between Ukraine and Russia have failed, the chief executive of Russian gas giant Gazprom has said.
Alexei Miller said gas supplies to Ukraine would be cut on Thursday but that Russia would do its best to guarantee supplies to Europe.Alexei Miller said gas supplies to Ukraine would be cut on Thursday but that Russia would do its best to guarantee supplies to Europe.
Russian PM Vladimir Putin earlier claimed that Ukraine would block supplies to Europe if no deal was done. Russian Prime Minister Vladimir Putin earlier said that Ukraine would block supplies to Europe if no deal was done.
Ukraine denies owing money to Gazprom, and says it has guaranteed gas transit.Ukraine denies owing money to Gazprom, and says it has guaranteed gas transit.
Gazprom said it would cut Ukraine's supply from 0700 GMT on Thursday.Gazprom said it would cut Ukraine's supply from 0700 GMT on Thursday.
Europe's gas pipeline network Enlarge Map
"The debt to Gazprom for gas supplied earlier was not paid. Despite verbal statements from Kiev, Gazprom did not see any money in its account," said Mr Miller in a live television briefing."The debt to Gazprom for gas supplied earlier was not paid. Despite verbal statements from Kiev, Gazprom did not see any money in its account," said Mr Miller in a live television briefing.
He blamed Ukraine for the situation and said Gazprom had no legal reason to continue supplying gas to Ukraine. He criticised Ukraine's stance during the negotiations as "unconstructive", and said Gazprom had no legal reason to continue supplying gas to Ukraine.
"Starting from 1000 hours [0700 GMT] on 1 January 2009, Gazprom will stop in full, 100%, supplying gas for consumers in Ukraine," he said. Mr Miller said the contract to supply gas depended on the full settlement of £2bn in gas bills and late-payment fines levied by Gazprom.
A similar row between Gazprom and Ukraine in 2006 led to gas shortages in several EU countries.A similar row between Gazprom and Ukraine in 2006 led to gas shortages in several EU countries.
'Unconstructive''Unconstructive'
Mr Miller said he blamed Ukraine entirely for the situationA spokesman for Ukrainian state energy firm Naftogaz, Valentin Zemlyansky, confirmed that the negotiations were over. A spokesman for Ukrainian state energy firm Naftogaz, Valentin Zemlyansky, confirmed that the negotiations were over.
But the company has said that natural gas supplies to European neighbours will remain secure, reported AFP. Naftogaz said it has paid $1.5bn (£1bn) in outstanding bills to RosUkrEnergo - a Switzerland-registered gas trading company which is acting as an intermediary - but not the fines imposed by Gazprom.
Gazprom's Alexei Miller said he blamed Ukraine entirely for the situationThe company also said that natural gas supplies to European neighbours would remain secure, reported AFP.
"Europe will receive all the gas Russia supplies it with," the agency quoted Bogdan Sokolovsky, the Ukrainian president's representative on energy issues, as saying."Europe will receive all the gas Russia supplies it with," the agency quoted Bogdan Sokolovsky, the Ukrainian president's representative on energy issues, as saying.
Mr Miller had earlier criticised Ukraine's stance during the negotiations as "unconstructive". Gazprom is the world's largest gas producer and supplies a quarter of the European Union's gas needs, or 42% of the EU's gas imports, much of it via Ukraine.
He said the contract to supply gas depended on the full settlement of £2bn in gas bills and late-payment fines levied by Gazprom. Russia's Vladimir Putin had earlier warned Ukraine not to disrupt the transit of gas to Europe.
Naftogaz has said it has paid $1.5bn (£1bn) in outstanding bills to RosUkrEnergo - a Switzerland-registered gas trading company which is acting as an intermediary - but not the fines. He warned of "very severe consequences" for the Ukraine in terms of its relations with both Russia and European countries.
Mr Putin said Gazprom had been generous in offering Ukraine a price of $250 per 1,000 cubic metres of gas in 2009, given that the price in Europe was currently more than $500.
He said he understood that Ukraine was in "a difficult economic situation" which was worse than Russia's, but put the dispute down to a "war of the clans" between the Ukrainian Prime Minister, Yulia Tymoshenko, and President Viktor Yushchenko.
In response, Ms Tymoshenko abandoned plans to fly to Moscow to take charge of the talks in person.