Russia warns of full-scale gas crisis in Ukraine

Moscow, July 3 (IANS) A full-scale gas crisis is looming in Ukraine unless Kiev settles its multi-billion-dollar debt to Moscow, Russian Prime Minister Dmitry Medvedev said Wednesday.

"Ukraine does not pay for gas. Their debt is enormous. They are taking gas from underground storage facilities," Medvedev wrote on his Facebook account, warning there will be a full-scale gas crisis by this fall, reports Xinhua.

Russian energy giant Gazprom has estimated that Ukraine owed it $4.46 billion. On June 16, Gazprom switched to the prepayment regime for gas supplies to Ukraine following failure of talks mediated by European Union Energy Commissioner Guenther Oettinger.

Gazprom CEO Alexei Miller said last week it was "extremely likely" that Ukraine would start illegally sucking Europe-bound gas from the transit pipeline in the fall.

However, deputy head of Ukraine's Naftogaz company Alexander Todiichuk said earlier Wednesday that Ukraine had enough gas in its underground storage facilities to last until November.

On June 23, Naftogaz said it was willing to resume talks with Gazprom on gas transit. The company was seeking to change the existing gas transit pricing which ties transportation fees to the cost of the fuel components, inflation in Europe and Russian gas price for Ukraine.

Kiev currently charges Moscow about $3 per 1,000 cubic metres of gas per 100 km of transit.

Ukraine, whose gas transit network already operates below capacity, is also seeking to prescribe in the contract a minimum annual volume of gas it transports to Europe from Russia.

According to Russian estimations, Ukraine has accumulated 14.2 billion cubic metres of natural gas in its gas holders. The country needs at least 18.5 billion cubic metres of gas to survive the fall and winter and to ensure smooth gas transit to Europe.