Gazprom sees political risk to Ukraine gas payments

Tensions between Moscow and Kiev over gas payments and storage have subsided in the past two months to the relief of the rest of Europe, which suffered a two-week halt to a fifth of its gas supplies in January after a row between the two.

Ukraine is transit route for the bulk of Russia's gas exports.

"There is a risk. In mid-January there will be an election and payment for January supplies is due on February 7," Alexei Miller, the head of Russia's gas export monopoly Gazprom, told the Valdai discussion group of Russia experts.

"When I meet with colleagues from (Ukraine state energy firm) Naftogaz Ukraine and I ask them what will happen in 2010 they tell me: we simply don't know," Miller added.

Kremlin aide Arkady Dvorkovich said Russia wanted political stability in its neighbour, where political paralysis has hammered the currency and raised a threat of default on some debts.

"Russia does not need a weak Ukraine. Russia needs a strong Ukraine as a partner. A strong, politically stable Ukraine is better than a weak Ukraine that creates a political and economic crisis for us," he said.

"The risks in Ukraine are like those in Russia in the 1990s. They cannot be calculated."

Ukrainian Prime Minister Yulia Tymoshenko said last week the country had stored enough gas to ensure smooth supplies to Europe this winter.

Tymoshenko, the most popular Ukrainian politician in office, wants to avoid a new gas row with Russia in the run-up to a presidential election on Jan. 17, in which she has said she will run.

Earlier this month she clinched a deal with her Russian counterpart Vladimir Putin, who allowed Ukraine to import much less gas than previously agreed, saving Ukraine's strained economy from potential big fines.

Tymoshenko's warmer ties with Russia over recent months have prompted speculation that Moscow may be backing her in the election to gain influence over the former Soviet republic.

Gazprom, which supplies one quarter of Europe's gas, has already paid transit fees to Ukraine in advance until the first quarter of 2010.

Russian President Dmitry Medvedev ordered Gazprom last week to stop advance payments, a clear signal Russia wants to know first who will lead Ukraine.

Miller added that until January he anticipated no problems.

"I think there will be no problems through December. Today we have very good relations with Ukraine regarding gas because Ukraine is fulfilling its contractual obligations regarding payments and transit," he said.

"Ukraine has financial resources, gold and forex reserves and IMF funding and the scope of their financing enables them to pay to the end of 2009," he said.