EU faces deepening energy crunch over Russian gas

By Christian Lowe

MOSCOW (Reuters) - Europe faced a deepening energy crunch and more sub-zero temperatures on Wednesday, with Moscow and Kiev showing little sign of a swift resolution of a pricing dispute that has slashed Russian gas supplies to the West.

Russia accused its former Soviet neighbour of stealing about 15 percent the gas it ships across Ukraine to European states.

"Ukraine has stolen gas not from Russia, but from consumers who have bought the product and paid for it," Prime Minister Vladimir Putin said in televised remarks late on Tuesday.

Ukraine's pro-West President Viktor Yushchenko blamed Moscow for the supply disruptions, saying Moscow would continue to close the gas taps to Europe or stop them altogether.

Europe's heavy dependence on Russian energy -- and its vulnerability to supply disruption -- was highlighted when Moscow reduced volumes to Ukraine on New Year's Day after failing to reach agreement with Kiev over debts and gas prices.

So far Eastern and central Europe have borne the brunt of the row, Bulgaria talking of "a crisis situation" and cutting or suspending supplies to industrial users. Two fertiliser companies had to halt production.

France and Italy also reported a steep drop in supplies but the euro zone's major economies have so far escaped any economic repercussions.

Nevertheless, German energy provider E.ON Ruhrgas said drastic cuts and a prolonged cold spell could cause shortages. High energy users like aluminium, glass and metals makers could be hurt by a lengthy crisis.