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Q&A: Impact of Russia's gas supply cuts



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MOSCOW, Russia (CNN) -- Russia's state-owned natural gas monopoly Gazprom has suspended the flow of natural gas to Ukraine after Ukrainian officials refused to sign a new gas-price agreement.

We asked CNN's Moscow correspondent Ryan Chilcote to explain the background to the dispute.

Q: How far apart are the two countries from reaching a new pricing agreement for natural gas?

A: On the surface there are absolutely no signs of any talks in the near future. The rhetoric that the two countries use when talking about the other side's moves is actually quite harsh and that makes it unlikely that there will be a breakthrough in the next couple of days.

If you look a little bit deeper, however, the reality of the situation is that these countries will most likely have to agree on a price sooner or later, perhaps within the next couple of weeks.

Q: What is the timetable for a resolution of this problem?

A: First of all, there is no big deal, analysts say, for this shortage in supplies to Ukraine and Western Europe -- as it appears is now to be happening -- if it lasts a couple of days.

If that shortage in supplies continues for weeks, that could create a major problem in Russia's ability to supply Western Europe with natural gas just as Western Europe appears to be entering into what looks like a very cold winter.

Q: Russia has accused Ukraine of diverting about 100 million cubic meters of gas -- valued at $25 million -- intended for other European countries and keeping it for itself. What is behind that charge?

A: The Russians themselves have said that the only natural gas going into Ukraine right now is Russian natural gas. And all of it is meant for export. So the fact that they're putting natural gas into those pipelines on the Russian-Ukrainian border and less is coming out after it goes through Ukraine, the Russians maintain that Ukraine is taking some of that gas.

Q: Is that a legitimate concern on the part of the Russians?

A: Ukrainian officials have flatly denied that they have taken any of Russia's natural gas. The Ukrainian prime minister, in fact, has said that Ukraine has not taken one single cubic meter of Russia's natural gas.

However, one energy official from Ukraine did add that the country will take some of Russia's natural gas that passes through Ukraine's territory for Western Europe if it gets any colder than it is right now. The energy official said that wouldn't be stealing, that would be payment for the transit of Russia's natural gas to Western Europe.

Q: Does Ukraine have enough natural gas reserves to last on its own?

A: Ukraine has enough reserves to last at least until this spring -- at least enough to heat people's homes in Ukraine throughout the winter. Analysts say the Russian shortfall could come as a short-term hit to Ukrainian industry. In particular, industry that is heavily dependent of subsidized rates of gas that it has been getting from Russia in the past.

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