Ukraine appeals to Europe in Russia gas dispute

(KIEV) - Ukrainian authorities appealed for Europe's support Tuesday in a bitter energy row with Russia as the pro-Moscow opposition called for President Viktor Yushchenko's impeachment over the crisis.

While officials said Ukraine was blocking the transit of gas supplies to Europe despite an EU deal to resolve the crisis, Energy Minister Yury Prodan called for Europe's backing in the pricing dispute that kicked off the dispute.

"The European community is interested and will participate in our negotiations with Russia," he said during a televised parliamentary debate on the Russia-Ukraine gas crisis.

"We hope that we will not be left to face Russia alone," he said.

But a European diplomatic source in Brussels said the European Union was "very sceptical" about getting involved in such a complex dispute.

The deal to resume gas supplies on Tuesday appeared to break down earlier after Russian state energy giant Gazprom said Kiev was blocking transit to Europe.

Ukraine admitted blocking the gas but said it was Gazprom's fault for imposing "unacceptable" conditions for its transit through Ukraine.

The crisis also took a political turn when the powerful Regions Party and the Communist Party called for the government to resign and for impeachment proceedings to start against the country's pro-Western president.

"We demand ... the immediate dismissal of the government and the start of procedures for the impeachment of the president," said Regions Party leader Viktor Yanukovych, a former prime minister and presidential candidate.

"In the middle of a political and economic crisis, the authorities have left Ukraine without gas and without prospects. Ukraine is in the process of losing its status as a transit country," he added.

Analysts said that supplies to Europe would continue to be threatened as long as the two countries did not resolve their bilateral dispute.

"Until they resolve the bilateral dispute there's zero chance of supplies not being disrupted," said Andrew Neff, an energy analyst at IHS Global Insight.

Moscow and Kiev have yet to reach a deal on the price for Russian gas deliveries to Ukraine in 2009, with Russia demanding an increase to 470 dollars per 1,000 cubic metres from 179.50 dollars in 2008.

Ukraine, which has long benefited from preferential prices on Russian gas, refused on December 31 an offer to pay 250 dollars per 1,000 cubic metres.

Russia subsequently cut off gas supplies to Ukraine's domestic market, eventually leading to widespread disruptions for European supplies.

Gazprom is also demanding that Ukrainian state energy company Naftogaz pay a 600 million dollar debt to the Russian company.

Denis Sakva, an energy analyst with Kiev-based Dragon Capital Research, said it was unclear when the dispute could be resolved but that both sides were under increasing pressure.

"There's no way they will not resolve the conflict ... Both Ukraine and Russia need this contract badly," he said, pointing to Ukraine's limited domestic gas reserves and Russia's lack of capacity to store gas meant for Ukraine.

Ukraine in particular needed to end the crisis quickly, he said.

"If they are not able to solve the problem, the whole Ukrainian economy may collapse," he said.

Neff of IHS Global Insight said it was in the EU's interests to push for a longer-term gas supply contract between Russia and Ukraine in order to avoid disruptions again next year.

Gas disputes between the two countries have become an annual affair and the repeated signing of one-year contracts is at the root of the problem, he said.

"If the Europeans want to avoid the gas going off next January they need to stay engaged and push for a longer-term deal," he said.

Hundreds of thousands of people have had their gas heating cut off across central Europe in the current crisis, which has set off alarm bells in Europe about the reliability of supply from Russia.

The EU relies on Russia for a quarter of its total gas consumption.