European gas supplies will be hit by Ukraine dispute

Under-pressure Ukraine said today it would reduce gas supplies to Western Europe because of Russian cuts to its own supply.

Russia has this week made two big reductions in the amount of gas it provides to Ukraine in a row ostensibly about unpaid bills.

Yesterday Ukraine promised the dispute would not affect the gas that Russia routes through its pipeline system to the rest of Europe.

But today Russia's Gazprom state natural gas monopoly said Ukraine had notified it would to reduce transit gas supplies after all.

A Gazprom spokesman said Ukraine intends to cut 60 million cubic metres a day.

"It means that Gazprom will supply this amount of gas to Ukraine, but it won't reach European consumers," the spokesman said.

He said the move will result in supplies of Russian gas to other parts of Europe dropping from 386 million cubic metres to about 325 million a day.

The countries' two state-owned gas companies are in a debt and contract dispute.

On Monday Gazprom cut shipments by 25 per cent and then announced a further 25 per cent cut yesterday.

Gazprom portrays the cuts as a straightforward commercial dispute, but it has considerable political resonance.

Gazprom's chairman is Russian President-elect Dmitry Medvedev, and critics accuse the Kremlin of using Gazprom as an instrument of pressure. Russia has been irritated by Ukrainian President Viktor Yushchenko's push for membership in Nato and the EU.

Only about one-quarter of the gas imported by Ukraine is of Russian origin; the rest comes from Turkmenistan and Kazakhstan in pipelines controlled by Gazprom.