Gazprom Deputy Chief Executive Alexander Medvedev spoke to journalists in London: 

• In the early hours of the morning Ukrainians shut down 3 of its export pipelines.  This is absolutely unprecedented in the history of the industry.

• As a result, the current flow through Ukraine to Europe is currently 7 times less than normal (now 40 mcm is getting through to Gazprom’s customers.)

• The current debt level for December is $614M and is rising as contractually fixed late payment penalties are accruing since 1 January 2009.

• Gazprom wants to comply with the memorandum agreed by Prime Ministers Tymoshenko and Putin, which involves a gradual movement to market prices.

• We remain willing to negotiate.

• We had offered Ukraine a fixed price of $250 per 1,000 cubic meters of gas for 2009, which was rejected. If Ukraine was to pay European market prices for gas deliveries at this point it would pay $450 per 1,000 cubic meters (the current European market price.) If Ukraine bought Central Asian gas from us at the Russian-Ukrainian border that price would be $380 per 1,000 cubic meters – both of these prices are based on a pricing formula which takes into account the oil price among other factors and will go down at the end of the second quarter 2009.

• After the events of 2006-2007 we established an early warning system with our partners, customers and European customers and have been keeping them informed.

• The Ukrainian delegation left the negotiating table six hours before the deadline. We understand that Mrs. Tymoshenko had accepted the proposed terms but this was blocked by Mr. Yushchenko.

• The Ukrainians have brought this to an extreme situation and did not provide any information about their actions. They have behaved irresponsibly by halting the supply of natural gas via Ukraine.

• I have been in touch with Andris Piebalgs, EU Energy Commissioner, and he informed me that one hour before the shutdown he received a call from the Ukrainian delegation and there was no reference to the shutdown.

• Our expert engineers along with our European partners are doing everything to avoid a loss of pressure in the pipelines.

• We are doing everything we can to increase supply via alternative routes (Belarus, Blue Stream, European storage) but this can’t entirely compensate.

• RosUkrEnergo has more than 10 bcm in underground storage in Ukraine and we understand that Naftogaz Ukrainy isn’t responding to any RosUkrEnergo requests for them to release that gas.  

• The situation continues to deteriorate.  Europe is hostage of the irresponsible behavior of a transit company.