Ukraine eyes truce with rebels as Russia cuts gas supply

Ukrainian president Petro Poroshenko has outlined plans for a ceasefire with pro-Moscow separatist rebels, even as Russia alarmed the European Union by cutting off gas supplies to his country. Kremlin-controlled energy firm Gazprom stopped pumping gas to Ukraine yesterday morning, as a deadline expired for the country to pay at least $1.95 billion (€1.44 billion) in arrears. About 15 per cent of all the gas used by the EU arrives from Russia through Ukrainian pipelines, and Gazprom warned Brussels that Kiev might siphon off fuel intended for western customers. Russia and Ukraine traded accusations of blame for the failure to reach a compromise, and are suing each other over a dispute that adds another dimension to an already explosive crisis in their relations.

‘Blackmail’

Gazprom's chief executive, Alexei Miller, complained to Russian premier Dmitry Medvedev that Kiev had "adopted a position that can only be called blackmail" and was demanding an "ultra-low" gas price.

Mr Miller said Ukraine would now have to pay in advance for gas, and had so far not paid for any future deliveries.

Ukraine’s energy minister Yuri Prodan said: “We have been informed that gas deliveries to Ukraine have been reduced to zero, with only the volumes sent for transit to European states.”

He also made clear that Kiev “guaranteed the gas needs of Ukrainian consumers and ensured reliable gas transits to European countries.”

Analysts said Ukraine had sufficient gas for several months, but faced difficulties filling storage tanks ahead of winter. To partially counter the problem, Ukraine is seeking to buy back Russian gas from neighbouring EU states like Poland, Slovakia and Hungary.

The European Commission said Ukraine must boost gas reserves from a current 13.5 billion cubic metres to 18 to 20 billion cubic metres before winter.

Russia offered Ukraine’s Kremlin-backed president Viktor Yanukovich a big gas discount after he rejected a major EU agreement last November, but doubled the energy price for Kiev when he was replaced by pro-western leaders in February.

The European Commission said Ukraine was willing to accept a Brussels-brokered compromise deal, but Russia was not.

Kiev says Moscow is refusing to agree a new contract price, and is instead offering to reduce its gas price by waiving an export duty – which Gazprom could re-impose at any time, giving Russia continued leverage over Ukraine.

Ukraine's prime minister Arseniy Yatsenyuk claimed that ultimately the row "is not about gas."

“It is a general Russian plan to destroy Ukraine . . . It is yet another step against the Ukrainian state and against Ukrainian independence.”

Kiev and western allies accuse Russia of allowing fighters and advanced weapons to cross its border into eastern Ukraine to assist separatist rebels there.

Mr Poroshenko yesterday ordered Ukraine’s military to secure the border this week, after which a truce and peace plan could be discussed.