21st Mar 2023

Russia-Ukraine gas crunch could strike again, Putin says

  • No other choice than to cut off gas supplies if Ukraine doesn't pay its debt. (Photo: Kai Mörk)

Europe might face gas cuts anew this winter, but would get a "detailed" advance warning this time, if Russia decided to turn off the tap to Ukraine over their price disputes, Prime Minister Vladimir Putin said on Thursday (4 December) during a televised question-and-answer session.

"We are now assuming that we will meet no problems in gas transit to Europe. If Ukraine, however, fails to comply with transit terms, or taps gas bound for Europe, we will have to cut back on our supplies to Europe," the former president said.

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Mr Putin's words contrasted with previous statements from both Russian and Ukrainian officials who said that they hope the gas dispute won't lead to a disruption of supplies to Ukraine or European consumers, as was the case in 2006.

Ukraine carries 80 percent of Russian gas exports to Europe and has been facing serious difficulties in paying its outstanding debt to Gazprom. With its economy badly hit by the global crisis, Kiev has been forced to seek an emergency €13 billion loan from the International Monetary Fund.

Mr Putin, however, showed little mercy for Ukraine's economic situation and claimed Kiev still owes Russia €2 billion for previously consumed gas, a sum contested by the Ukrainians.

"They ask us to keep the same prices," he said. "How long can we leave in place the prices of the current year?" Switching into Ukrainian, Mr Putin added: "Have you lost your mind?"

Naftogaz, the Ukrainian state energy company, failed to pay off in full a tranche of its debt this week, in part because costs spiralled after a collapse in the value of the Ukrainian currency.

Gazprom has warned that it could double prices next year if the debt is not repaid in full.

While the cost of oil has fallen by two-thirds since summer, Russia can charge its gas customers more in 2009 because gas prices trail the movement of oil by six months.

No early return as president

The Russian premier ruled out the idea of organising early elections that would see him return as president. He said he would wait until 2012 - when the presidential polls are scheduled - to decide whether to run at all.

Recent decisions by the parliament to extend the presidential term from four to six years have fuelled speculation that Mr Putin may return to the post soon.

He was obliged to step down this year after serving two consecutive terms. Dmitry Medvedev was elected as Russia's new president in May.

Mr Putin said he had a "very effective tandem" relationship with Mr Medvedev. "We have worked together for several years," he added.

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