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  Europe's Big Chill: EU Warns Ukraine and Russia on Gas Deliveries

Europe's Big Chill EU Warns Ukraine and Russia on Gas Deliveries

After 10 days of no natural gas from Russia, Europe is frustrated. EU leaders have issued starker warnings against both Russia and Ukraine as some eastern Europeans continue to go without heat. But it isn't clear how much influence the EU has -- even as Russia's biggest energy customer.

Leaders in the European Union issued new warnings to Russia and Ukraine on Thursday that their continuing squabble over the price of gas could hurt Europe's long-term relations with both Moscow and Kiev.

Germany's Chancellor Angela Merkel focused on Russia after meeting British Prime Minister Gordon Brown in Berlin on Thursday. "Confidence in Russia could be lost in the long term," she said.

Merkel plans to meet Russian Prime Minister Vladimir Putin in Berlin on Friday, and she promised to mention the gas dispute. "In my talks with Prime Minister Putin I will have to address this issue," she said.

But EU ambassadors from the 27 member nations meeting in Brussels on Thursday pointed fingers at both Russia and Ukraine. "This situation will have significant financial, economic and political consequences for both countries," they said in a joint statement.

For the 10th straight day on Thursday, no natural gas flowed to Europe -- in spite of an emergency agreement reached more than a week ago to ensure shipments would move from Russia to paying customers under the eyes of EU mediators.

The EU depends on Russian gas for a fifth of its total supply -- and in turn represents Russia's most important bloc of customers for gas. The fact that 80 percent of the gas that the EU imports from Russia passes through Ukraine means that the bloc has been hit by a row between Moscow and Kiev. Gazprom, the gas monopoly owned by the Russian state, had turned off the gas supplies to Ukraine on Jan. 1 in a dispute over unpaid bills and an impasse in negotiations over new gas pricing for the country. Last Wednesday gas deliveries to Europe through Ukrainian transit pipelines ceased entirely and since then some nations, like Bulgaria, have seen central-heated buildings and homes go cold.

The emergency agreement signed by Russia and Ukraine on Monday was just to keep the gas moving -- a settlement of the price dispute is nowhere in sight. Russia had proposed a summit in Moscow to resolve the problem this weekend, but the French Foreign Ministry said "conditions are not ripe" for a resolution until the gas was flowing again. "The first and foremost priority is the immediate resumption of Russian gas supplies to the EU through Ukraine," said the EU ambassadors' statement.

Instead of the meeting in Moscow, according to the Ukrainian president's office, Kiev will host a summit of six eastern European presidents on Friday for talks on the gas dispute. This one-sided meeting combined with France's rejection of the Russian summit will probably be seen as a snub in Moscow.

But not everyone blames Russia. Kiev had promised on Jan. 10 to send shipments of gas to Bulgaria from Ukrainian reserves, and the Bulgarians -- some of them suffering through a long cold snap lingering over Central Europe -- have seen no relief.

The threat by European governments to find "alternative" suppliers of gas will carry more immediate weight in Kiev than it does in Moscow. Chancellor Merkel admitted on Thursday that Germany -- like the rest of Europe -- had "no complete alternative" to buying at least some gas from Russia. But projects to pump bypass intermediate countries like Ukraine with pipelines going straight to Western Europe are already underway. Germany's Nord Stream project, for example, will lay a pipeline on the Baltic Sea floor from Russia to the German coast.

Former German Chancellor Gerhard Schröder chairs the consortium of energy companies in charge of building the pipeline -- effectively putting him on Gazprom's, and the Kremlin's, payroll. This caused some controversy after he left office in 2005. Schröder announced on Thursday that he would also join the board of a Russian oil company, TNK-BP, as part of a peace deal between its co-owners, BP of Britain and a group of Russian billionaires.

msm -- with wire reports