EU and US urge Russia, Ukraine to solve gas row

(BRUSSELS) - The European Union and United States Thursday called on Russia and Ukraine to swiftly end their row over gas supplies through negotiations without upsetting European customers.

The new EU Czech presidency insisted Moscow and Kiev must continue to provide natural gas to Europe after Russia halted supplies to Ukraine as contracted, after Russia announced it was turning of the gas tap to Ukraine amid a payments row.

"All existing commitments to supply and transit must be honoured," said Czech Deputy Prime Minister Alexandr Vondra, just hours after his country assumed the EU presidency from France at the new year.

US Ambassador to the EU, Kristen Silverberg, said "The US is urging both parties to resume negotiations."

"We believe this dispute can be resolved without any further interruption in gas supply, which could have humanitarian implications this winter," she added in a statement.

Russia halted supply of natural gas to Ukraine on Thursday after the two ex-Soviet neighbors failed to agree on payment terms, sparking fresh concerns about the security of energy resources controlled by Moscow.

Later in the day Ukrainian President Viktor Yushchenko said the two former Soviet neighbours were "close to a compromise" in their gas standoff and negotiations should be concluded by January 7,

Around one-fourth of the gas used in the European Union -- more than 40 percent of the gas imported by the bloc -- comes from Russia, 80 percent of it moving in pipelines that pass through Ukraine.

Exactly three years ago, on new year's day 2006, Russia turned off the gas tap to Ukraine, after which a number of countries including Germany, Italy and Poland, reported a fall in supplies just as winter demand hit a high.

This time however Ukraine and the EU say they have enough gas reserves to see them through the winter and there were no early signs of shortages in Europe.

French energy group GDF Suez said it saw no problem in ensuring gas supplies while Germany said local gas supplies were assured even if Russia's decision to halt deliveries to Ukraine disrupted distribution farther afield.

Nevertheless German Economy Minister Michael Glos joined the chorus for Moscow and Kiev "to find without delay" an acceptable solution to their dispute over payment.

Italy and Poland, two big consumers and among those briefly hit in 2006, said they had no immediate problem with their Russian gas deliveries, with similar assurances coming in from Austria and the Netherlands.

The EU presidency and the European Commission said in a joint statement that they were "concerned" by the turn of events.

"The Presidency and the Commission urge both sides and their governments to continue negotiations and rapidly reach a successful outcome so that gas supplies to the EU are not affected," the statement said.

Ukraine's gas company, Naftogaz, confirmed that the volume of gas it was receiving from Russia had dropped, but promised that transit of supplies meant for customers downstream in Europe would be guaranteed.

"The EU trusts that we can count upon assurances given that gas supplies to the EU will be unaffected as a demonstration of the reliability of its gas suppliers," said the EU's Energy Commissioner Andris Piebalgs, adding that the situation at the EU border would be "monitored closely."

Both the EU presidency and the commission "are in contact with both sides," the statement added.

Recently, the 27 EU nations agreed an ambitious energy and climate change package aimed, in part, at reducing the bloc's reliance on Russia, including energy efficiencies and increased use of renewable sources.

The European Union is also focusing on developing a "southern gas corridor" to transport supplies from the Caspian Sea and Middle East regions, bypassing Russia, as well as an energy ring linking Europe and southern Mediterranean countries.

The Czech Republic assumed the EU's rotating presidency on Thursday for a six-month term.

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