Russia cuts off gas supply to Ukraine

Ukraine says Russia has now cut off its supply of natural gas supplies following a breakdown in negotiations.

Talks brokered by the European Union failed to bring the two sides to an agreement and with a 3rd of the EU's gas being supplied by Russia, there's concerns this decision could have a serious effect on gas trade in Europe.

Jack Parrock Reports.

IN: Europe sees
OUT: SOC
DUR: 2 mins 30

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SCRIPT

REPORTER VO:
Europe sees around 15 per cent of it's supply of natural gas come over Ukrainian ground and it's why the EU has been keen to be the one mediating the talks between Russia and Ukraine.The Russian gas company Gazprom says it will only supply Kiev with gas which has been paid for upfront - Europe is concerned about the ramifications on it's own supply. But the European Commission says it's sure the danger of a serious shortage is a long way off yet due to how much gas Ukraine has stored. Sabine Berger is the EU's Energy Spokesperson.

BITE: SABINE BERGER
"What we can say if that in order to have a safe supply in winter for the EU, Ukrainian storages should be filled and the storage should amount to around 18-20 billion cubic meters at the end of summer. This is why we think it's important also to find a solution and to enable the filling of the storages."

REPORTER VO:
The dispute centers around debt repayment and the price Ukraine pays for gas with went up by 80 percent after the fall of the former government. The two agreed on a winter price of 385 USD per 1000 cubic meters but Russia refused to allow a summer price drop to around 300 dollar which was also part of the EU proposal. As fas as European concerns go, energy experts like Dr Arno Behrens is an energy expert at the Centre for European Policy Studies says it's not in Russian interests to prolong the dispute.

BITE: Dr Arno Behrens - Centre for European Policy Studies
"I think that they will get back together around the table. You have to see that the market in terms of volume of Ukraine is one of the biggest destination markets of Gazprom - equal to the size of Germany - about 30 billion cubic meters per year. So there's clearly also an interest for Gazprom to supply this market. And of course what's maybe more important is to be perceived and to continue to be perceived as a reliable supplier which is also in the interest of Gazprom in terms of its downstream diversification. You've seen the deals being struck with China - there are possibilities with other countries in the East and therefore Gazprom is not interested in a long term disruption of relations."

REPORTER VO:
The situation in Eastern Ukraine isn't perceived to be improving making diplomatic tensions harder to resolve but the EU says it's still 'not pessimistic' about the prospect of getting Russia and Ukraine back around negotiating table and preventing the two sides taking the issue to the arbitration court in Stockholm.

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