Q+A: Russia-Ukraine gas clash: same story, new factors

MOSCOW/KIEV (Reuters) - Russia's Gazprom gas export monopoly said on Wednesday its engineers were starting preparations for a January 1 cut-off of gas to Ukraine that could have a knock-on effect on supplies to Europe.

Gazprom said talks on with Ukraine on debt payments and a new contract had failed and that it would suspend supplies to Ukraine on Thursday. It promised to do its best to guarantee supplies of gas to Europe via the territory of Ukraine.

Analysts say a Gazprom supply cut to Ukraine could have a smaller impact than during a similar row in 2006 because Ukraine has enough reserves to ride out a standoff and keep shipping Russian transit gas to Europe.

WHAT HAPPENED TO THE DEBT?

Ukraine has said it paid off in full debts owed for gas supplies until the end of the year. Naftogaz says it has paid $1.52 billion to intermediary RosUkrEnergo.

Gazprom said the debts were worth over $2 billion. It confirmed RosUkrEnergo -- its 50/50 intermediary gas venture with two Ukrainian businessmen - received the $1.52 billion but says Gazprom itself has not received that money.

AND THE SUPPLY AGREEMENT? Ukraine now pays $179.5 per 1,000 cubic meters (tcm) from $50 in 2005. After threatening to more than double the price to $400, Gazprom is now offering Kiev to sell gas at $250 per tcm.

Interfax news agency cited an aide to Ukraine's President Viktor Yushchenko as saying that price would be "unacceptable" if the transit fees Russia pays to transport gas to Europe remain unchanged.

Ukraine also says the price should be lower because global oil prices have fallen dramatically in the past six months. Gazprom itself expects European prices to fall to $250-$300 by mid-2009 from $500 now.