Russia Reverses Itself on Gas Cuts

On Sunday, with no agreement on a new price, Russia cut by 120 million cubic meters a day the volume of gas it sent down the Ukrainian pipeline -- Ukraine's share. But there were soon reports that the volume of gas reaching Austria, Italy, France, Hungary, Poland, Slovakia, Romania and Croatia at the other end had fallen by as much as 40 percent.

Gazprom claimed that Ukraine was stealing gas -- about $25 million worth on Sunday alone, according to Alexander Medvedev, Gazprom's deputy chairman. "If the theft continues at such a tempo, then the value of the stolen goods will be extremely significant," he said.

Drops in gas volume were widely reported after Russia, in a pricing dispute, cut Ukraine's supply. The gas crosses Ukraine to reach pipelines such as the one above in Campiolo, Italy. (Eni Group (Italy) Via Associated Press)

Ukraine's fuel and energy minister, Ivan Plachkov, denied the Russian claim. "Ukraine is using its own gas, gas from underground stores and gas from Turkmenistan in strict compliance with the signed contract," he told reporters in Kiev. But he warned that if temperatures drop in Ukraine, leading to a surge in demand, then "we will start consuming Russian gas received as payment for the transit under the existing contract terms."

Utilities in the E.U. raised the possibility of rationing the key source of energy for industry and home heating unless the dispute was resolved. Gazprom quickly blinked.

In a telegram sent to the Ukrainian national oil and gas company, Naftogaz Ukrainy, on Monday afternoon, the Russian company said 95 million cubic meters would be restored. Those supplies are "not intended for Ukrainian consumers but are to be transmitted through Ukrainian territory to consumers outside Ukrainian territory as compensation for the gas that has been appropriated by the Ukrainian side without authorization," the telegram said.

This was the second time in two years that the Kremlin has damaged its relations with Western Europe in a confrontation with Ukraine. Putin openly backed a pro-Kremlin candidate in Ukraine's fall 2004 presidential elections, which were widely regarded as fraudulent. A popular revolt eventually led to the election of Yushchenko. Russia's relations with Ukraine, which Moscow has historically viewed as within its zone of influence, have been strained since.

Correspondents Molly Moore in Paris and Mary Jordan in London and special correspondent Iouri Loutsenko in Kiev contributed to this report.