Gazprom Threatens to Cut Gas to Ukraine

By Nataliya Vasilyeva

MOSCOW -- Russia's state-owned natural gas company Gazprom will stop shipments to Ukraine if it doesn't pay a $2 billion debt and agree to sharply higher payments for future deliveries by New Year's Eve, the company's chief executive said Tuesday.

Ukraine faces a replay of the January 2006 crisis, when a cutoff of Russian gas shipments resulted in a reduction of supplies in Europe. Gazprom supplies a quarter of the gas used by EU nations, and around 80% of it goes through Ukraine.

But this year could be worse. The financial crisis has hit Ukraine harder than most other European countries, and Kiev was recently forced to seek $14.5 billion in aid from the International Monetary Fund. ...