THE threat of winter gas cuts loomed over Europe yesterday as Russia and Ukraine failed to resolve a dispute that led Moscow to cut off gas supplies to its neighbour last week.

Despite assurances from the two countries that supplies to Europe would not be affected, three European Union states reported an immediate drop in pipeline pressure.

Poland, Hungary and Romania, which rely heavily on Russian gas delivered through pipelines that cross Ukraine, said that less gas than expected was being delivered.

Romania’s pipeline operator said supplies had fallen by 30-40%. And a spokesman for Hungary’s main energy company said: “Pressure started to decline on Friday. It’s declining continuously.”

The news prompted the EU, which gets a fifth of its gas from Russia via Ukraine, to summon a crisis meeting in Brussels tomorrow and demand that transit and supply contracts be honoured.

“Energy relations between the EU and its neighbours should be based on reliability and predictability,” the president’s office of the 27-nation bloc said in a statement.

Gazprom, the Russian state gas giant, accused its Ukrainian counterpart, Naftogaz, of siphoning off gas supplies destined for Europe. “The Ukrainian side openly admits it is stealing gas and is not ashamed of this,” said Sergei Kupriyanov, of Gazprom. Naftogaz rejects the charge.

In a row that has been building up for weeks, Russia halted gas deliveries to Ukraine after the two former Soviet allies failed to sign a new contract guaranteeing supplies for this year.

Moscow says it is owed £1.3 billion in unpaid gas bills. Naftogaz says it has paid most of its debts to a go-between company nominated by Gazprom. In addition, the two sides have failed to reach agreement on the price Ukraine should pay for its own gas supplies.

Moscow’s relations with Kiev have been strained since Ukraine’s 2004 pro-western Orange revolution. Russia demanded that it pay £278 per 1,000 cubic metres of gas, a huge increase from the £120 it paid last year. The price, say the Russians, is in line with what EU countries pay.

After Ukraine, which has been badly hit by the global financial crisis, flatly rejected the new price, Gazprom made a second offer of £166.

The Ukrainian side said it would be prepared to pay £134, a figure that it says takes into account the fall in world energy prices.

Gazprom, which has been badly hit by the credit crunch as a result of its heavy borrowing, says the offer is too low. Negotiations broke down on New Year’s Eve without a new contract being signed.

Also at stake are transit fees that the Russians pay Ukraine for gas supplied to Europe. Naftogaz wants an increase from £1.13 per 1,000 cubic metres per 100km of pipeline to £1.30.

The dispute echoes the price row in January 2006 when Russia cut off supplies to Ukraine, causing serious disruption in several European countries.

Russia was accused of using its energy resources to punish Ukraine for electing a pro-western government with ambitions to join Nato.

Ukraine did not have sufficient gas reserves in 2006 to see it through the winter. This time it does. European member states are also said to have large gas reserves to cope with any short-term cuts.

Moscow’s relations with Kiev are still strained but the row this time is less politicised. Russia, which is at pains to be seen as a reliable energy partner, says it is pumping more gas via alternative routes to ensure supplies to Europe are not disrupted.

The longer the dispute drags on, as both sides refuse to compromise, the more doubts will grow about the reliability of Russian gas supplies.

“This time round there is far more understanding for Russia’s position than there was three years ago,” said a western diplomat.

“But at the end of the day, who is to blame makes little difference. We need to know that we’re safe from such price disputes. If we’re not, then Russia shouldn’t be surprised when people say we need to find alternatives.”

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