European Union enters natural-gas dispute between Russia, Ukraine

The European Union stepped into a dispute that has drastically reduced energy supplies to the continent, saying Wednesday that it had won agreement from Russia and Ukraine for independent monitoring of natural-gas flows through Ukraine.

The pledge, European officials said, should help restore gas supplies to the West, which were halted Wednesday in a dispute over prices and transit fees.

After phone conversations with Prime Ministers Vladimir Putin of Russia and Yulia Tymoshenko of Ukraine, European Commission President Jose Manuel Barroso said both leaders had agreed in principle to allow monitors to verify gas movements.

But he also warned both countries – and particularly Ukraine – that failure to help restore supplies could have consequences for their relationships with the European Union.

The pipelines crossing Ukraine carry about one-fifth of the natural gas consumed in Europe. After keeping out of the gas dispute for several days, the Europeans were forced into action on Wednesday when the shutdown left several member nations – Slovakia, the Czech Republic, Austria, Hungary and Romania – with no Russian gas supplies in the midst of a bitter cold snap.

Bulgaria, almost entirely dependent on Russian gas, was in a particularly dire situation, with several towns going without heat. Romania declared a state of emergency, and a factory in Hungary, a unit of Japanese automaker Suzuki, said it was halting production because of restrictions on industrial users of gas.

Russia said it would not restore shipments until monitors were in place in Ukraine.

Russia`s gas monopoly Gazprom stopped all gas shipments to Ukraine on Jan. 1 after the two countries failed to agree on prices and transit fees for 2009 but kept supplies flowing to Europe over Ukraine`s pipelines.

Russia reduced supplies Tuesday, accusing Ukraine of siphoning off gas meant for Europe. All gas shipments were cut by Wednesday morning, but Russia said it did so after Ukraine`s Naftogaz had stopped the compressor stations used to transship gas across its territory.

The New York Times, The Associated Press, Dallas News