Russia cuts gas as trade war grows

The Russian state-controlled gas company is halting supplies to Ukraine. Photo / AP

Russia and Ukraine sank further into a widening trade war yesterday, as Russia halted all gas deliveries to Ukraine and Ukraine banned Russian airlines from using its airspace.

Tensions have heightened over the disputed peninsula of Crimea, which Russia annexed in March last year, but which still depends on Ukraine for much of its key infrastructure.

Following a blackout in Crimea prompted by an explosion that downed several electricity pylons on Ukrainian territory, the two countries have traded punitive measures with little restraint.

Russian President Vladimir Putin told journalists yesterday that Ukraine's Government had tacitly supported the Crimea blackout, which he said was "torturing people".

Alexei Miller, chief executive of the Russian energy giant Gazprom, yesterday said gas supplies would be cut off to Ukraine as of today until Russia received prepayment for further deliveries.

"Supplies are being stopped until new payments arrive from the Ukrainian company," he said.

Russia briefly cut gas supplies to Ukraine in July and in June last year as Russian-backed separatists and Ukrainian forces clashed in the country's southeast, after the ousting of former President Viktor Yanukovych. Russia also cut gas supplies in 2006 and 2008 because of price disputes.

Ukrainian Prime Minister Arseniy Yatsenyuk responded yesterday by announcing that the national gas company, Naftogaz, had been directed to buy gas from European suppliers, and by introducing a ban against flyovers of Russian aircraft.