London (Platts)--2Jan2009

Italy is monitoring the ongoing dispute between Russia and Ukraine, which
has seen Russia cut supplies to Ukraine since Thursday, Italy's economic
development minister Claudio Scajola said in a statement late Thursday.

"The Ministry of Economic Development is monitoring the gas crisis
between Russia and Ukraine and is working with the European Union to find a
solution that ensures the regularity of supply," Scajola said in the
statement.

He added: "There are problems for Italy. [However] gas storage facilities
are at the highest levels, over 90%, and we have already prepared all the
measures to increase, where necessary, imports of gas by pipeline."

Gas storage operator Stogit's web site, however, showed storage levels
were at 83% as of January 1, 2009.

Scajola called for measures to diversify Italian gas imports, about a
third of which currently come from Russian gas monopoly Gazprom. In the winter
of 2005-06, the last time Russia cut off supplies to Ukraine, Italy was the
hardest hit European consuming country.

Scajola said: "This new crisis serves to confirm the urgent need to
launch a national energy plan [focused on] diversifying energy sources and
areas geographical supply."

Ukrainian President Viktor Yushchenko said Thursday that Ukraine and
Russia will resume natural gas talks within one or two days, and will probably
be able to reach an agreement by January 7.

He sought to ease fears that the dispute might lead to disruption of gas
supplies to European customers who get Russian gas via Ukrainian pipelines.

"I would like to stress that Ukraine has accepted international
obligations on ensuring guarantees for transit of Russian gas to the European
Union," Yushchenko said.

Ukraine is the main transporter of Russian gas to European consumers,
accounting for up to 80% of such supplies. Ukraine moves at least 110 billion
cu m of Russian gas annually to the EU.