World's Energy

8 January 20098 - Upstream OnLine - France and Germany today told Russia it had to honour its gas contracts with Europe regardless of its dispute with Ukraine, but also reminded Kiev not to forget its own obligations towards the European Union. French President Nicolas Sarkozy and German Chancellor Angela Merkel told reporters they would encourage Russia and Ukraine to continue talks to try to end their row that has hit gas supplies to many European countries. "We expect the talks between Ukraine and Russia to yield quick results," Merkel said following her meeting with Sarkozy. Russia cut off gas for Ukraine's domestic consumption on New Year's Day after disagreements over gas prices and debts owed by Ukraine. It later suspended supplies of transit gas towards Ukraine, disrupting distribution across Europe. Russia's Gazprom said there was no point delivering the gas because Kiev had shut down the lines. Ukraine said Russia was deliberately starving Europe of gas. "The Russians have to respect their contractual obligations to Europe," Sarkozy said, while Merkel warned that it was in Russia's "interest in being seen as a reliable partner". However, both leaders indicated that Europe also held Ukraine responsible for the situation. "As for Ukraine, I think I am well placed to say that Europe has done a lot for Ukraine," he said, explaining that France had helped obtain a privileged status for Ukraine in its dealings with the European Union "No one should hold anyone hostage," Reuters quoted him as saying. South-eastern Europe has borne the brunt of the disruption, but it has affected supplies as far west as France and Germany as Europe faced freezing mid-winter temperatures. "Searching for the causes is not the first priority. The first priority is for gas to reach Bulgaria, Serbia and Bosnia again," Merkel said. "Germany is relatively well-equipped with storage facility but other countries aren't. That will certainly also have consequences for European policy. We will think about how to get more storage capacity," she added.