JKX 2006

hi folks the last par in this pice should carm the markets some what info only[hd]

Russia turns down the gas after Ukraine rejects price hike plan

MOSCOW (AFX) - Russia began lowering the pressure of natural gas entering
Ukraine's pipeline system, a spokesman for the Gazprom energy company said,
giving assurances that supplies to the rest of Europe were not at risk.
"We have been forced to start the operation to lower the pressure in
Ukraine's gas pipeline system," state-controlled Gazprom's spokesman Sergei
Kupriyanov told Agence France-Presse after a deadline expired for Kiev to agree
to a steep gas price increase as from April.
Russia and Ukraine have been locked in a bitter gas price dispute for
months, sparking concerns in European Union states that depend heavily on
Russian energy supplies.
"Export gas will be delivered in its totality," Kupriyanov continued,
referring to deliveries to the rest of Europe.
"We were ready to come to an agreement with the Ukrainian people... Our
offer was rejected," Kupriyanov said.
Around one-fifth of Europe's gas supply comes from Russia via Ukraine and is
carried into Ukraine by a single main trunk pipeline from Russia that then
branches off into the country's pipeline network and European routes further
west.
Ukrainian Prime Minister Yury Yekhanurov said last week that if Moscow
stopped supplying Kiev then his country of 48 mln people would have the right to
take 15 pct of the gas transiting through its territory to Western Europe.
There was no immediate official comment from the Ukrainian government after
Gazprom's announcement of the pressure reduction.
Kiev has so far been paying 50 usd per 1,000 cubic meters of natural gas
from Russia. Gazprom, wants 230 usd, arguing that Soviet-era tariffs no longer
apply and the price needs to be aligned with market rates.
Kiev has said it can pay more over a transitional period but Gazprom said it
would shut down Ukraine's gas supply from January 1 unless Kiev agreed to the
higher price immediately.
Ukraine depends on Russia for around one-third of its natural gas supplies,
importing some 25 bln cubic meters per year, and many ordinary Ukrainians have
expressed alarm despite official assurances that the country has enough reserves
to last the winter. As the row with Russia deepened, Kiev signed an agreement
last week with the Central Asian state of Turkmenistan, which has some of the
largest gas reserves in the world, to supply 40 bln cubic meters of gas to
Ukraine at 50 usd per 1,000 cubic meters.
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