Russia Cuts Off Gas Supply to Ukraine
After rejecting $1B offer
By Rob Quinn,  Newser Staff
Posted Jun 16, 2014 3:29 AM CDT
Updated Jun 16, 2014 4:00 AM CDT
Ukraine Energy Minister Yuriy Prodan speaks to reporters outside a government building in Kiev, Ukraine today.   (AP Photo/Sergei Chuzavkov)
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(Newser) – Relations between Russia and Ukraine are set to slide even further downhill after Kiev and Moscow failed to make a breakthrough in a bitter dispute over natural gas, with Russia today cutting the gas supply to the country. Russian gas exporter Gazprom says the deadline for Ukraine to pay a debt of nearly $2 billion passed at 2am ET, Reuters reports, and "gas supplies to Ukraine have been reduced to zero," Ukraine's energy minister confirmed. He says the country can make do without Russian gas until December. The state-owned gas firm, which jacked up the price of gas it sells to Ukraine by 40% in April, rejected Kiev's offer to pay $1 billion now and the rest in monthly installments. Going forward, Gazprom says it will demand that Ukraine pay in advance for any future deliveries.

Ukraine says it refuses to clear the debt immediately in protest of the massive price hike, reports the BBC, which notes that around 15% of the gas used in the European Union comes from Russia via Ukraine. The decision does not immediately affect the gas flow to Europe, but could disrupt the long-term energy supply to the region if the issue is not resolved, the AP notes by way of analysts. The pipeline to Ukraine also carries the gas earmarked for Europe, and one analyst said that while Russia was likely to cut off only the gas meant for Ukraine, Ukraine could in theory simply take what it wants since the gas is intermingled. That would result in a shortage in pipelines to Europe that could hinder the buildup of stored gas ahead of the winter heating season when demand is higher.