Blogger's Note: How long will it take? This is EXACTLY the reason we need to become less dependent on fossil fuels. The countries with oil have other countries over an oil barrel and it gives them bully power.
Russia starts cutting off Ukraine gas
By Christian Lowe1 hour, 38 minutes ago
Russia started cutting off gas supplies to Ukraine on Sunday, a move that could hit deliveries to a winter-bound Europe on the day Moscow makes its debut as chairman of the Group of Eight industrialized nations.
Russian Gazprom said it would turn off the taps to Ukraine at 10 a.m. (0700 GMT) after Kiev refused to pay the increased amount Moscow was demanding for its gas and last-ditch efforts to resolve the price row failed.
Russian news agencies said the state-controlled company had already started reducing pressure in the gas pipeline to its ex-Soviet neighbor before the deadline.
Gazprom supplies 25 percent of western Europe's gas -- much of it via Ukraine. It said deliveries to western Europe would not be affected but Italy's gas importer said Gazprom had warned it disruption was possible.
Ukraine's Western-leaning government has complained Moscow was using its control over massive energy resources as a political weapon.
Russia rejects the allegation but it is a suggestion that is being viewed with concern from Berlin to Washington.
Russia's President Vladimir Putin had offered late on Saturday to postpone the price increases until April if Ukraine agreed to the new terms, but a Gazprom spokesman said that offer was rejected.
"The plan to cut supplies from ... 10 o'clock is still in force," spokesman Sergei Kuprianov told Reuters.
West European states, drawing 80 percent of their Russian deliveries from the same pipeline network crossing Ukraine, have expressed concern over the dispute, as has Washington.
Moscow insists it can cut Ukrainian gas while safeguarding supply to others. The danger, in theory, was that Ukraine could nonetheless tap off gas to which it feels it was entitled, thus effectively reducing the flow onwards to western Europe.
Moscow took over the rotating G8 chairmanship from Britain on Sunday, the first time it has held the role and one of the main themes of its tenure will be security of energy supply.
Moscow is seeking a rise in the price of gas it sells to Ukraine to $230 per 1,000 cubic meters from the current $50 -- a level that reflects Soviet-era subsidized rates.
Ukraine agrees in principle but wants a transitional period.
Ukrainian officials accuse Moscow of using the issue to punish Kiev for its drive to join both the European Union and NATO a year after mass protests helped propel Viktor Yushchenko to a presidential election victory -- beating a Kremlin-backed candidate.
Italian oil and gas firm Eni said it had been warned by Gazprom that supplies could be disrupted. Central European states set up contingency plans. Poland said it had at least a week's reserves of gas to guard against supply interruptions.
The EU has called a January 4 meeting of energy officials from its member states to work out a common approach.
Putin's period in office has been marked by an increasingly assertive foreign policy that appears aimed at regaining some of the influence Moscow has lost in former Soviet republics since the collapse of the Soviet Union in 1991.
(Additional reporting by Meg Clothier in Moscow, Olena Horodetska in Kiev)
Copyright © 2006 Reuters Limited.
