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Pressure rising as gas supplies fall

By James Rodgers
BBC News, Moscow

Russian Prime Minister Vladimir Putin and Gazprom chief Alexei Miller, 5/1/09
Vladimir Putin and Alexei Miller discussed the gas crisis on TV

This dispute is growing more bitter, and the threat to European gas supplies is increasing.

Now the Ukrainian state gas company, Naftogaz, says that the amount of gas it is receiving from Russia has gone down by more than two thirds compared to the level prior to 1 January.

After accusing Ukraine of stealing supplies destined for Europe - something Ukraine denied - Gazprom said it would reduce by around 20% the amount of gas it sends to Europe via Ukraine. But Ukraine says the cut is much greater than that, and that supplies are continuing to decline.

Both countries continue to blame each other.

This nominally commercial dispute now has an overtly political side to it. Russian television showed the Russian Prime Minister, Vladimir Putin, giving his approval to Gazprom's plan to reduce the amount of gas sent to Europe via Ukraine.

'Political tool'

In one of the moments of political theatre which are a trademark of Russian television news, Mr Putin sat across the table from Alexei Miller, Gazprom's CEO.

The prime minister questioned Mr Miller at length about various aspects of gas supplies to Russia and its neighbours before coming onto the subject of Ukraine.

Vladimir Putin makes his position clear

Mr Miller explained Gazprom's view that Ukraine was taking gas it was meant to be sending on, and suggested that Russia might respond by reducing supplies.

"Yes, cut it today," Mr Putin said.

While many Russians will share Gazprom and the government's contention that Ukraine is to blame for any shortages which Europe may suffer, there is also a sense that the political element makes a lasting solution very much harder.

"I am very afraid that this is not the last that we'll see in this conflict," says Mikhail Krutikhin, editor-in-chief at rusenergy.com.

"It is going to be repeated year after year unless they do some kind of permanent deal. I doubt, considering the political situation, they can do that. It is a political tool for the decision makers both in Moscow and Kiev," he concludes.

Reliance on Russia

Mr Putin's high-profile intervention reinforced that sense that there is much more at play here than a row about contacts and prices.

It is hard to imagine a similar dispute could arise between Russia and a Ukraine which had not sided with Georgia in last summer's war in South Ossetia; a Ukraine which had not said it dreamed of joining Nato - a Russian nightmare.

Most ordinary people here are focused on other things. Russia is in the middle of a lengthy annual holiday period around New Year and Orthodox Christmas.

The capital and the rest of the country will not return to work until next week. When they do, their concerns are more likely to be about their own economic prospects - just keeping their jobs in what even this country's usually reassuring government admits will be a tough year.

But there are issues which will affect Russia's future standing as an energy supplier.

Whoever is to blame for the shortfall of supplies to Europe, the dispute is likely to reinforce concerns that getting gas from Russia is less than totally reliable.

The number of countries who have built up reserves in anticipation of a repeat of the row of 2006 strongly suggests that perception is already widely held.

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