Russian gas supplier warned to honour obligations

The head of Russia's monopoly gas supplier was warned today to honour the company's obligations to the European Union or face the loss of reputation and revenues as western customers looked elsewhere.

The warning came amid a flurry of meetings in Brussels involving senior Russian and Ukrainian officials and gas company executives seeking to break the deadlock over blocked supplies, which has spilled over to hit energy deliveries to at least seven EU countries.

Alexey Miller, chief executive of Gazprom, Russia's state-controlled supplier, held talks with European Commission President Jose Manuel Barroso, while other Gazprom officials sat alongside top brass from Naftogaz, Ukraine's gas company, at talks with MEPs in the European Parliament.

As both meetings went on, Mr Barroso's spokesman Johannes Laitenberger, told journalists: "It is in the interests of Russia and Ukraine - in the interests of Gazprom and Naftogaz - to resolve this situation.

"It is true that the immediate problem is for those whose have lost their gas supplies, but in the medium and long term the problem is with those who are found not to be reliable suppliers.

"This reputation is at risk and that means of course that customers will have to think about alternatives."

In his meeting with Mr Miller, Mr Barroso repeated comments he made yesterday - that the credibility of Russia and Ukraine - were in question as "reliable" partners in their relations with the EU.

He said Brussels was ready to despatch observers to the region immediately to monitor the flow of gas - and also to establish where responsibility lay for reduced supplies to EU countries after Russia turned off the gas tap to Ukraine.

The bulk of EU supplies from Russia come through Ukraine, but Kiev denies Moscow's claim that Ukraine has been siphoning off EU-bound supplies to compensate for the loss of its own deliveries in a row over unpaid bills.

As Mr Miller met Mr Barroso at EU Commission's headquarters, Euro-MPs were meeting in special session to hear from both sides.

One Ukrainian official insisted that Ukraine had paid all of its gas debts, and the head of Naftogaz, Oleh Dubyna, told MEPs the dispute was not political but "purely economic".

Polish MEP Jacek Saryusz-Wolski, chairing the European Parliament meeting, said: "We hope at the end of today we will be able to say that gas supplies to the EU have been restored -but that is the most optimistic scenario.

"The problem is that this dispute has transformed itself into a serious energy crisis affecting homes and industries. We are not here to lay blame, but to see energy supplies restored, in compliance with world trade rules."