Russia halts gas supplies to Ukraine amid clashes

2014-06-18 Vatican Radio

(Vatican Radio)-- Ukraine says neighboring Russia has cut off all natural gas supplies to Kyiv, in a major escalation of a  dispute over outstanding debt between the two nations.

The latest stand-off comes after Moscow also expressed anger over a crackdown by Ukrainian government forces on pro-Russian separatists in  Ukraine's troubled east.  

Listen to Stefan Bos’ report:

Ukrainian Energy Minister Yuri Prodan confirmed that Russian natural gas supplies to Ukraine had been reduced to zero.   

Russia's state-controlled energy giant Gazprom defended the move saying Ukraine had paid nothing for natural gas shipments by Monday and that the company would demand payment in advance for any future deliveries.

It came as a setback for the European Union's Energy Commissioner Guenther Oettinger who attended talks between Ukrainian and Russian officials in Kiev. 

"Main points of my proposal have been a plan for payments. This plan foresees 1 billion dollars to be paid immediately and for the moment our Russian partners did't accept my proposal and they insisted to get 1.9 billion dollars immediately," he told reporters.  

LAWSUITS FILED

Gazprom also announced it filed a lawsuit at the Stockholm arbitration court demanding Ukraine pay off  4.5 billion dollars of natural gas debt. That prompted Ukraine's energy giant Naftogaz to filed a lawsuit at the same court demanding around 6 billion U.S. dollars the company said it overpaid to Russia due to an "unfair" contract. 

Yet Commissioner Oettinger still hopes an agreement can be found.  

"With some more flexibility we should come and we could come to a solution," he said, adding that  he would work hard the coming days to achieve one.   

It comes amid a severe crisis in relations between the two countries following Russia's annexation of Ukraine's Crimea Peninsula in March. 

Ukraine also accuses Russia of supporting a separatist insurgency in its eastern regions, which Russia denies. 

CEASEFIRE OFFERED

However Ukrainian President Petro Poroshenko said Monday he will this week propose a detailed peace plan, including a cease-fire with separatist rebels. 

But that did little to ease tensions with reports Monday that pro-Russian gunmen seized the regional treasury in the eastern city of Donetsk, potentially disrupting payments of pensions and other social benefits. Ukraine's National Bank building in the city was captured by separatists. 

Amid the turmoil, tourists are staying away from Crimea, with beaches mainly empty at the start  of the summer season threatening the livelihood of many. 

The Kremlin has now come up with a creative way to attract tourists to the Peninsula: It has asked state-controlled companies to get their employees to go there on vacation by paying for all or part of their trips.

(From archive of Vatican Radio)