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.

Gazprom reduces the volume of gas supply to the Ukrainian gas transportation system in compliance with the instruction of the Federal Customs Service

"Today OAO Gazprom received a letter from the Federal Customs Service of Russia on the results of customs formalities control for export shipments of natural gas to European customers. The letter notes that accumulation of gas on the territory of Ukraine can result in decreased proceeds of OAO Gazprom from export deliveries and in violations of Russian currency legislation".

"The Federal Customs Service instructed OAO Gazprom to take immediate measures and optimize gas delivery routes and regimes for European consumers and other measures necessary to comply with customs and currency legislation of the Russian Federation.

"In this connection Gazprom decided to reduce the supply of gas to the gas transportation system of Ukraine by 65.3 million cubic meters, i.e. by the volume that accumulated on the territory of Ukraine from January 1 to 4, 2009. A corresponding notification was forwarded to Naftogaz Ukrainy. In the message Gazprom called on Naftogaz Ukrainy to compensate by supplying an equivalent volume of gas to the western border of Ukraine by 10:00 hours on January 6, 2009 at the expense of its own resources. Gazprom also demands Naftogaz Ukrainy to take immediate measures to provide for an uninterrupted transit of natural gas across the territory of Ukraine in compliance with the acting contract on the volumes and terms of Russian natural gas transit from 2003 up to 2013.

"Responsibility for possible changes in the gas transit regime and, consequently, for reduced supplies to European customers lies with Naftogaz Ukrainy." 

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

• Alexander Medvedev stated that Ukraine was stealing 50 million cubic meters of gas and withholding deliveries to Hungary, Poland and Romania. Medvedev also said that Ukraine was siphoning off gas from the transit pipeline to Europe and from underground storage.

• Medvedev also noted that Gazprom has delivered gas through alternative routes, using the Yamal-Europe pipeline through Belarus and Poland and by tapping into underground storage tanks, to meet demand from Western Europe. "Our customers currently under our contracts don't feel any non-deliveries. We are doing it in order that our customers will not suffer, but it is not easy in the current circumstances because winter in Europe is getting colder," he said.

• He also confirmed that Gazprom plans to file a suit in the coming days with a Stockholm arbitration body accusing Ukraine of violating a contract for the transit of gas to Europe.

• "We expressed [to European governments] the opinion that the government of the states that are facing a shortage of supplies due to the policy of Ukraine, they should use all legal means ... to force Ukraine to conform to its contractual obligations," he said.

• "The overall volume of... better to say it in black and white -- stolen gas -- is 50 million cubic meters. It's a substantial amount," Medvedev said.

Gazprom Implores Ukraine to Return to Negotiations and Desist from Siphoning European Gas

Four days after the Ukrainian delegation unilaterally left negotiations with Gazprom over its gas supply contract, Gazprom once again urged its Ukrainian partners to return immediately to the negotiating table and to desist from siphoning off natural gas from Russia’s shipments to other countries. 

“Since 31 December, Ukraine has refused to negotiate with Gazprom, and instead has resorted to siphoning off gas intended for European customers, in full breach of its obligations as a transit country. We implore Ukraine to desist from these illegal actions and to come back to Moscow to negotiate once and for all a mutually acceptable gas supply deal.  Gazprom has taken every possible step to find a workable solution, and to bring and keep both sides at the negotiating table.  We remain willing to meet with them immediately,” said Gazprom Deputy Chairman Alexander Medvedev.

Ukraine has admitted to siphoning off gas from pipelines and underground storage facilities, in clear violation of a signed transit contract that runs through 2010, as well as its obligations as a signatory to the Energy Charter.  As a result, energy firms in Bulgaria, Poland, Romania and Hungary have noted falls in supply.  Gazprom has increased volumes to the Blue Stream pipeline towards Turkey, as well as to the gas transport system through Belarus to address this situation in the short term.