KIEV, Nov. 22 – Russian gas giant Gazprom warned Saturday it may completely suspend gas supplies to Ukraine if the country fails to pay its $2.4 billion gas debt by the end of the year.

The warning stands as further evidence that relations between Gazprom and Naftogaz Ukrayiny, the national oil and gas company, have been worsening rapidly, jeopardizing steady gas shipments to the European Union.

“We would like to avoid this chain of events,” Sergei Kupriyanov, spokesman for Gazprom, told Russian Vesti television program on Saturday. “We still have time until the New Year to agree on everything, but you perfectly understand that we cannot supply gas without a contract.”

Gazprom and Naftogaz were supposed to sign the contract, which outlines gas supply volumes and prices in 2009, before the end of November, but the talks have recently stalled following an emerged dispute over gas debts.

The warning comes days Russian President Dmitry Medvedev has urged Gazprom on Thursday to take unspecified action against Naftogaz to force Ukraine to pay the $2.4 billion gas debt.

Gazprom on Thursday reacted immediately by threatening to hike gas prices 122% to $400 per 1,000 cubic meters in 2009, a price level that Ukraine would apparently not be able to afford.

But the latest warning goes further in putting pressure on Ukraine and may provoke a chain of events that may eventually disrupt gas supplies from Russia via Ukraine to Europe.

The escalating dispute focuses on the gas debts that Naftogaz apparently owes RosUkrEnergo, a Swiss-based gas trader in which Gazprom owns 50% stake.

Clouds started to gather over RosUkrEnergo earlier this year when Prime Minister Yulia Tymoshenko had pledged to remove the company from the lucrative gas trading operation.

Naftogaz, which apparently owes $2.4 billion to RosUkrEnergo for gas supplies in September, October and November, has been struggling to make the payments.

The company was buying gas at $179.5 per 1,000 cu m and later re-selling it to households at a fraction of this price as Tymoshenko had been persistently refusing to increase domestic gas prices to market levels ahead of elections.

Instead, Tymoshenko pushed for replacing RosUkrEnergo with Gazprom as the only gas supplier to Ukraine in 2009.

President Viktor Yushchenko on Friday criticized Tymoshenko for running “unprofessional” energy policy over the past 10 months, and gave the government five days to clear the debts.

“This government began its history by making no payments for gas in the first quarter,” Yushchenko said.

Tymoshenko responded to the criticism by saying that those were corporate debts, involving Naftogaz, RosUkrEnergo and Gazprom, and the government had nothing to do with them.

“Those are not the debts of the government of Ukraine, but the debts of RosUkrEnergo that had been left over,” Tymoshenko said. “The government of Ukraine owes nothing to RosUkrEnergo.”

“I think we have to stop corruption in the gas sector and not to put the blame on Ukraine and on the government,” Tymoshenko said. “I think that our government will be able to stop the corruption and to switch to transparent direct gas supply contracts.”

Gazprom has already twice suspended gas supplies to Ukraine over the past three years, each time blaming Ukraine for the failed gas payments.

In January 2006 Gazprom suspended gas supplies to Ukraine for four days in a move that had also disrupted gas supplies throughout Europe.

In March 2008 Gazprom reduced gas supplied by 50% for four days in a move that had not affected gas supplies throughout Europe.

Meanwhile, analysts said that Ukraine is apparently well-prepared to the possible confrontation with Gazprom as it had stored about 30 billion cubic meters of gas in its underground gas tanks, filling them up to capacity.

Naftogaz apparently owns 17.2 billion cu m, while RosUkrEnergo owns 11 billion cu m, according to a source at the Energy and Fuel Ministry. (tl/ez)