This codology has been coming for a long time, but the Ukrainians have finally gone and tripped the switch.
Short version:
Russia sells gas to the Ukraine at one third of the market price.
Ukraine is bust and can't afford to pay (even at this massively discounted price).
Russia gave the Ukrainians a couple of months warning that they had to bring their account up to date by December 31st or else the tap would be turned off.
Ukraine assumed that the EU would never let this happen and called Russia's bluff.
Russia turned off the Gas intended for Ukraine.
Ukraine started stealing Gas that was intended for other customers.
Ukraine left in the cold as Russians cut gas
Russia cut all gas supplies to Ukraine yesterday, raising the threat of shortfalls across Europe.
State-run Gazprom shut down pipelines after talks with Naftogaz, its Ukrainian equivalent, broke down without a supply deal for 2009.
The move raised fears that Ukraine would siphon off gas bound for Europe as it did during a similar dispute in 2006; 80pc of the gas Europe buys from Russia arrives through pipelines that cross Ukraine.
A Gazprom spokesman said: "We have cut off all gas that is meant for Ukraine. All our other contractual obligations are being fulfilled."
Ukraine accused of stealing gas
Russian gas giant Gazprom has accused Ukraine of stealing gas meant for other European countries.
"The Ukrainian side openly admits it is stealing gas and has no shame about it," company spokesman Sergei Kupriyanov said.
Hungary says gas pressure from Ukraine drops
..Pressure on Hungary's natural gas pipeline that ships Russian gas via Ukraine has dropped but it is not causing any disruption in gas supply, oil and gas firm MOL MOLB.BU said on Friday.
"Pressure started to decline at 1500 GMT. Pressure is declining continuously. However, the drop has not yet reached a critical level," Edina Lakatos, a spokeswoman for MOL's natural gas transmission subsidiary Foldgazszallito Zrt., told Reuters.
She said pressure on the pipeline was at around 45 bars, below the contracted level.
Janos Zsuga, Chief Executive of MOL's gas transmission subsidiary told Reuters that the pressure which Ukraine has to provide under contract was 48 plus/minus one bar.
Zsuga also said that Ukraine had informed Hungary that it was planning to reduce the daily amount of gas shipments by 5 million cubic metres.
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