Russia cuts off natural gas to Ukraine

MOSCOW -- Russia halted natural gas deliveries to Ukraine on Monday, rejecting Ukraine's offer to pay some of its multibillion-dollar gas debt and demanding upfront payments for future supplies.

The decision, coming amid deep tensions over eastern Ukraine, provoked strong words from both sides but does not immediately affect the crucial flow of Russian gas to Europe. Additionally, Ukraine has enough reserves to last until December, according to the head of its state gas company, Naftogaz.

Still, the Russian move could disrupt Europe's long-term energy supplies if the issue is not resolved, analysts said. Previous gas disputes left Ukraine and some Balkan nations shivering for nearly two weeks in the dead of winter.

The gas conflict is part of a wider dispute over whether Ukraine should align itself with Russia or with the 28-nation European Union and comes amid a crisis in relations stemming from Russia's annexation of Ukraine's Crimean Peninsula in March. Ukraine accuses Russia of supporting an armed separatist insurgency in its eastern regions, which Russia denies.

Ukraine's new president, meanwhile, said Monday that he will propose a detailed peace plan this week that includes a cease-fire with the separatist rebels. But before that happens, the armed forces must secure control over Ukraine's porous border with Russia, President Petro Poroshenko said at a meeting of his national security council.

"As soon as the border is closed, we can immediately declare a cease-fire," he said. "Declaring a cease-fire while the border is open would be irresponsible."

There was no immediate response from the separatists.

Fierce fighting persisted in Ukraine's east Monday. In Donetsk, gunmen took over several buildings in the city, including the regional treasury, the national bank and the tax administration. Serhiy Taruta, the governor of Donetsk, said the takeover means the state may have to stop paying salaries and pensions.

The Organization for Security and Cooperation in Europe said as many as 4 million people in the Donetsk region risk losing water because the pumping station and pipeline have been damaged in fighting.

Ukraine, one of the most energy inefficient countries in Europe, has been chronically behind on payments for the Russian natural gas needed to heat its homes and fuel its industries. In addition, Russia had been giving its neighbor deals on gas for various political reasons, which came to a halt April 1.

Russia had demanded $1.95 billion by Monday for past-due bills. At talks over the weekend in Kiev, Ukraine was ready to accept a compromise of paying $1 billion now and more later, but Russia rejected the offer, the European Commission said.

Sergei Kupriyanov, spokesman for Russian gas giant Gazprom, said that because Ukraine missed the deadline, from now on it had to pay in advance for energy.

EU member states got 24 percent of their gas in 2012 from Russia, according to industry association Eurogas, and about half of that went through pipelines across Ukraine. In 2013, Ukraine imported nearly 26 billion cubic meters of gas from Russia, just over half of its annual consumption.

Kupriyanov said Russian gas supplies for Europe will continue traveling through Ukrainian pipelines as planned and warned Ukraine to make sure they reach European customers.

In Washington, U.S. State Department spokesman Jen Psaki said the EU was working with both sides to broker a "commercially competitive compromise that addresses a market price and payments."

In a related case, Gazprom announced Monday that it is suing Naftogaz in an international court for the $4.5 billion it says Ukraine owes for gas from last year and this year. Naftogaz said it has also filed a suit against Gazprom, seeking a "fair and market-based price" for gas, as well as a $6 billion repayment for what it said were overpayments for gas from 2010.

In other news, Russia circulated a new United Nations resolution on Ukraine on Monday in a fresh effort to get the Security Council to address the worsening humanitarian situation and escalating conflict in the east between the government and separatist fighters.

Russia's U.N. ambassador, Vitaly Churkin, said Monday that the new resolution includes parts of two earlier resolutions it circulated this month that called for humanitarian aid, a cease-fire and a national dialogue in Ukraine.

It also includes several issues raised by council members including a reference to Ukraine's sovereignty, independence and territorial integrity, he said.

Information for this article was contributed by Vladimir Isachenkov, Matthew Lee, Edith M. Lederer and John-Thor Dahlburg of The Associated Press; and by Michael Birnbaum and Carol Morello of The Washington Post.

A Section on 06/17/2014

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