UPDATE 1-Poland's PGNiG to ask industry to curb gas usage

* Deliveries via Ukraine fall by another 7 mln cubic metres

* Reduction of deliveries to industrial clients on horizon

* Chemical companies warn of impact on profit, output

(Combines stories, adds quote, details, background)

Poland's dominant gas distributor PGNiG (PGNI.WA) said on Tuesday it would ask industrial clients to limit gas usage as supplies via Ukraine were hit by the pricing dispute between Moscow and Kiev.

Deliveries through Ukraine fell by a further 7 million cubic metres on Tuesday, PGNiG said in a statement, forcing it to draw more gas from its storage facilities.

The conflict between Ukraine and Russia over gas prices escalated dramatically on Tuesday, with deliveries halted to the Balkans, Turkey and southeast Europe.

Bulgaria, Turkey, Macedonia, Greece and Croatia said flows of Russian gas via Ukraine had stopped, creating what Bulgaria called a "crisis situation" in the middle of winter. [ID:nL6410970].

"PGNiG was told by RosUkrEnergo the (gas delivery) contract is impossible to carry out until further notice," PGNiG said.

The group said earlier its reserves were sufficient to supply all of its clients for a couple of weeks.

Gas pipeline operator Gaz System said it had asked the economy ministry for permission to cut deliveries to industrial clients in order to protect individuals.

Poland's largest fertiliser maker Pulawy PULW.WA, which uses nearly 1 billion cubic metres of gas annually, said the drop in deliveries may result in a further cut in production levels and have an impact on its results.

"There is a risk of further reduction in production levels," said Pulawy spokesman Grzegorz Kulik. "The fertilizing season is starting and it can have impact on the market and our results."

The company was already forced to cut its production levels by 30 percent in mid-November due to falling demand.

Ryszard Siwiec, the head of Poland's other leading chemical company Police PICE.WA, said he could be forced to halt production of nitrogen-based fertiliser, which accounts for a quarter of its output, if asked to further cut gas usage.

Source; By By Patryk Wasilewski and Adrian Krajewski, Will Waterman, reuters.com