European Union Energy Commissioner Andris Piebalgs said Tuesday that he believed gas supply cuts to the E.U. are a "real threat" given the escalation of the dispute between Russia's Gazprom OAO (OGZPY) and Ukraine.
Ukraine's state-owned oil and gas monopoly Naftogaz Ukrainy said earlier in the day that after Russia's gas monopoly imposed a further 25% cut in shipments to Ukraine, the total reduction amounted to 82% below normal import levels. This figure contradicts two Gazprom statements that there have been only two reductions, 25% each.
Piebalgs, speaking at an energy conference here, said he called on the two disputing parties "to not use forceful methods."
Although he said the parties told the Commission that they would continue to provide supplies to the E.U., he believed the threat of supply cuts was real: "It is a real threat, I take it as a real threat."
Gazprom, which supplies around a quarter of Europe's gas, is seeking a settlement with Ukraine over unpaid gas bills and wants to finalize the details of a scheme to eliminate intermediaries from the two countries' supply arrangements, switching instead to direct delivery contracts.
Piebalgs said if there is a disruption - as yet there have been no reported cuts to member states - the bloc was prepared to tap natural gas stocks.
The commissioner said he had convened a meeting of the EU Gas Coordination Group that will ensure "a fully coordinated E.U. response to the situation.
"I know that we have sufficient storage; our citizens will be in no danger," he said.
"But still, it brings back the question whether there is a need for the E.U. to develop legislation for gas stocks as we have for oil stocks," Piebalgs said.
Naftogaz said in a statement that the company "can guarantee steady transit of gas to European customers as long as it doesn't pose a threat to Ukraine's energy security.
"We can cope right now and will be able to cope for a while, but hope the issue is resolved by the end of the week," a Naftogaz spokesman said, adding that his company is drawing down gas from underground storage facilities.
Gazprom spokesman Sergey Kupriyanov said in a statement that the company "would fulfill all contracts, as it has done for decades. Natural gas deliveries to E.U. countries will continue at full volume."
Kupriyanov said the firm's Ukrainian partners "have currently neither paid for the deliveries nor formalized the necessary contracts. As a commercial company we need our clients to pay for the services provided.
"The situation emerging with the transit of Russian natural gas to E.U. countries via Ukrainian territory confirms once again the necessity of concluding clear and strict commercial contracts between the Russian and Ukrainian sides," he added.