Russia 'Restricts' Ukraine Gas On Unpaid Bill

Russia has reportedly stopped gas supplies to Ukraine after it missed a deadline imposed by Moscow to pay almost half its $4.5bn (£2.7bn) bill.

State-owned Gazprom said Ukraine's Naftogaz had failed to pay $1.9bn of its debt by its 0600 GMT (0700 BST) deadline and, as a result, the company would have to pay up front for its gas in future.

It also suggested deliveries for June remained uncovered.

Gazprom said: "Today, from 10:00 a.m. Moscow time, Gazprom, according to the existing contract, moved Naftogaz to prepayment for gas supplies.

"Starting today, the Ukrainian company will only get the Russian gas it has paid for," it said.

Major gas pipelines to Europe pass through Ukraine

A source at Gazprom was quoted by the news agency Reuters as saying that it had now "restricted" supplies while the company filed a lawsuit in Stockholm demanding immediate payment of the full amount.

It was unclear whether Ukraine was getting any supply from Russia but it was thought unlikely as Gazprom insisted that Kiev maintain Russian pipeline supplies to Europe and made no attempt to siphon gas to fuel its own infrastructure.

The developments follow the failure of EU-sponsored talks in Kiev aimed at reaching a settlement between Russia and Ukraine.

Naftogaz boss Andriy Kobolev has failed to agree terms with Russia

The European Commission said it was "convinced" a solution to the bitter dispute was possible, averting a deepening of the wider crisis over Ukraine's future that has seen East/West relations deteriorate to levels not seen since the Cold War.

It is understood that differences between Russia and Ukraine remain on future prices and on the amounts outstanding.

The EU had proposed a compromise package requiring Ukraine to pay $1bn immediately with the balance settled through six additional payments by the year's end.

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