OREANDA-NEWS. Russia's state-controlled Gazprom has halted gas deliveries to Ukraine's state-owned Naftogaz after the latter exhausted its prepayment balance.

The deliveries halted at 10:00 Moscow time (07:00 GMT) today, Gazprom chief executive Alexei Miller said. The "refusal to buy Russian gas creates serious risks for safe gas transit to Europe", he said.

Naftogaz rejected the claim that transit was imperilled. "Gazprom is trying to make some kind of show by halting gas deliveries to Ukraine, but we are not buying gas from Russia because its price is too high," Naftogaz business development head Yuriy Vitrenko said.

Russia has set a price of $227.36/'000m? for Ukraine in the fourth quarter. This translates to €20.30/MWh at today's foreign exchange rates and assuming a heat content of 10.6kWh/m?, which is consistent with Russian gas transiting Ukraine to Slovakia's border.

By contrast, Austrian day-ahead supply closed yesterday's trading session at €18.675/MWh, with December gas at €18.25/MWh.

Ukrainian inventories stood at 16.5bn m? at the start of today's gas day, 1.8bn m? higher than a year earlier. And although overnight minimum temperatures in Kiev are forecast to fall below zero from tomorrow, daily average temperatures are forecast above average until late December.

Withdrawals from Ukrainian storage have been subdued so far this winter compared with 2014-15. Withdrawals started on 20 October last year and by the end of November 2.8bn m? had been withdrawn — 2.2bn m? of that in November. This year, withdrawals did not start until 30 October and by this morning only 570mn m? had been pulled from storage.