Russia Demands Gas Debt Repayment

Russia has demanded Ukraine to repay a $2.4bn gas debt, raising fears of a renewed dispute which could disrupt supplies to Europe.

Ukraine said it owed just half the amount to RosUkrEnergo, a trading firm co-owned by the Russian giant Gazprom.

"We need to clarify ourselves with Ukraine's debt and recover it on a goodwill or compulsory basis", said Russia's president Dmitry Medvedev.

Russia cut gas supplies to Ukraine in 2006 because of similar reasons.

Gazprom stopped the flow of gas for three days, sparking alarm across Europe, which is heavily dependent on Russian gas transported through a pipeline network running via Ukraine.

The following years Russia threatened again to cut supplies, but eventually the two countries reached last-minute agreements.

Both Russia and Ukraine have insisted that they want to avoid using intermediaries in the gas trade in the future, but they have not agreed on price.

Moscow has said that it prefers to switch to market tariffs for ex-soviet states and charge Ukraine around $400 per 1,000 cubic metres of gas - more than double the current price.

The government in Kiev has argued in the past that it deserved to pay preferential tariffs as its pipeline network was an integral part of the system which allows the transport of Russian gas to European clients.

Author: Jo Amey