A dispute over gas prices between the Ukraine and Russia’s Gazprom has spread to the European Union, much of which relies on gas shipped through the Ukraine.

European buyers are understood to be receiving adequate supplies after Gazprom began pumping an additional 95 m3/d of gas to countries including France, Germany, Poland, Italy and Slovakia that reportedly experienced a drop in supply after Ukraine’s provision was cut.

Russia has reportedly alleged that the Ukraine has stolen up to $25 million worth of gas after supplies were cut, a charge which the Ukraine denies.

Diplomatic efforts by the EU are underway in a bid to resume talks between Ukraine and the Russian gas monopoly.

The dispute concerns prices rises proposed by Gazproim that would bring the price of gas supplies to the former soviet satellite state into line with those of the European Union. Gazprom wants to raise the price by more than 400% to $230 per 1,000 m3, a price Ukraine has refused to pay, although it is not opposed to an increase in gas prices, if this is phased in gradually.

One-third of EU gas imports, and one-fifth of gas used in the EU currently comes from Russia with the Ukrainian pipeline network carrying around 90% of exports to West and Central Europe. However, construction is underway of a new 1200 km gas line that will link Russia near the town of Vyborg with Germany in the vicinity of Greifswald via the Baltic, bypassing the Ukraine.

The first joint of the Russian onshore section of the North European Gas Pipeline was welded in mid-December with the offshore section due to be engineered, constructed and operated by North European Gas Pipeline Company owned by Gazprom (51%), BASF (24.5%) and E.ON (24.5%).

The first line of NEGP is slated for operations in 2010.