EU Gas Supplies at Risk If Ukraine Does Not Settle Bill With Russia

Gas supplies to the EU could be at risk again next week after a warning from Russia that it would reduce the supply to Ukraine on Monday unless Kiev settled its debts. The Russian state energy firm Gazprom says Ukraine owes it $1.5bn (£770m) for gas from Russia and central Asia.

A company called Rosukrenergo, half-owned by Gazprom and half by Ukrainian businessmen, currently supplies Ukraine with gas from Russia and central Asia. It has been the subject of outspoken criticism from the pro-western prime minister of Ukraine, Yulia Tymoshenko, who was returned to power in October.

Last week the Russian newspaper Noveya Gazeta claimed Rosukrenergo's real owner was Semyon Mogilevich, Russia's most notorious mafia boss, who was arrested by Russian police last week. The company's owners have denied any link. Mogilevich, 61, is wanted by the FBI. Noveya Gazeta said his arrest represented a victory for the Kremlin clan led by Dmitry Medvedev, Russia's likely next president, over the hardline siloviki faction, which had apparently been hiding Mogilevich.

Gazprom insists the latest row with Ukraine will not affect gas deliveries to the EU, as happened in January 2006. It said it would halt Ukraine's Russian gas, which makes up 25% of its supply; but continue supply from central Asia, which accounts for the remaining 75%.

The row comes days before Ukraine's president, Viktor Yushchenko, is due to visit Russia, and weeks before a visit by Tymoshenko. Russia's presidential election is due on March 2.