Vladimir Putin approved Gazproms proposal to cut gas supplies at the Russian Ukrainian border by the amount Russia says Ukraine illegally took. The article details Gazproms position, possible consequences for European consumers, and Hungarys reaction as it prepares for possible shortfalls. It also recalls the gas conflict that began on January 1 2009 over price and transit terms.

The head of the Russian government, Vladimir Putin, approved the initiative of representatives of Gazprom to reduce gas supplies to the border with Ukraine starting Monday by the amount stolen by the Ukrainian side.
Russia will begin on Monday to cut gas supplies to the Russian-Ukrainian border by an amount equal to the volume of gas stolen by Ukraine - 65.3 million cubic meters. On Monday, Gazprom CEO Alexei Miller informed Russian Prime Minister Vladimir Putin about the amount of gas illegally taken. In response to the cabinet chief's question about what proposals there might be in the current situation, Miller said: "There is a proposal to reduce the volume of supplies at the Russia-Ukraine border by the same amount that was stolen - 65.3 million cubic meters, and to continue reducing it by the amount of stolen gas on a daily basis." "Fine, I agree, reduce it starting today. And inform our European partners and the European Commission about the current situation," Putin replied. For his part, A. Miller noted that Gazprom, in order to compensate for gas supplies to Western Europe, will increase the volume of gas supplied through Belarus, Poland, and via the Blue Stream pipeline (through Turkey).
Another Gazprom representative, company deputy chairman Alexander Medvedev, who is currently representing the interests of the Russian gas monopoly in Paris, stated that Ukraine must pay for the unauthorizedly taken Russian gas at market price, that is, $450 per 1,000 cubic meters. "Gas that has been stolen cannot be calculated at any other price. This is gas not received by European consumers, and it must be compensated at such a price," he emphasized and expressed hope that European countries would take a position that would prompt Ukraine to resume negotiations with Russia on gas supplies in 2009.
"We still hope that not only our constructive position, but also Europe's position will lead to the fact that Ukraine will stop behaving so recklessly and irresponsibly and will return not just to the negotiating table, but will return with a professional approach, based on how the market is formed today," Medvedev said.
Meanwhile, already on Monday Hungary, one of the recipients of Russian gas transiting through Ukraine, may receive about 8 million cubic meters less. Such figures were given to journalists by Hungary's Minister of Transport, Energy and Telecommunications, Csaba Molnar, adding that such a shortfall would not create problems for the country, since this "volume can be drawn from underground gas storage facilities on the territory of the country." According to him, Ukraine informed Hungary that 30 million cubic meters would be supplied on Monday instead of the expected 38 million. However, no shortfalls were registered in the first half of the day.
Recall that the formal starting point of the direct gas confrontation was January 1, 2009, when Gazprom stopped gas supplies to Ukraine due to disagreement over the price of such supplies and the transit tariff rate (negotiations on these issues continued throughout the end of December 2008, but the parties were unable to reach a compromise). The Russian monopoly continues to supply natural gas in transit through Ukraine, while considering the Ukrainian side's use of part of this gas as technical gas to ensure transportation to be illegal. At the same time, Naftogaz of Ukraine insists that in the absence of agreed transit conditions it has the right to direct part of the gas supplied by Russia into the Ukrainian gas transmission system at the entry point to ensure its transit.