Nine European countries hit by gas shortages amid Russia-Ukraine row

A Ukrainian worker at a gas storage and transit point in Boyarka, outside Kiev (Sergei Chuzavkov/AP)

Nine countries in and around Europe have now reported problems with their gas supply as a result of Russia’s dispute with the Ukraine, after Slovakia, Greece and Croatia today disclosed they were experiencing drops in gas pressure.

The development comes as an emergency mission from the European Commission in Brussels and the Czech Presidency of the EU left this morning, bound for Kiev for talks with the Ukrainian authorities as the international crisis deepened.

The delegation of Czech diplomats and senior European officials also plans to meet senior officials from Gazprom, the Russian state gas monopoly, which cut supplies to Ukraine on January 1

A Commission spokesman said today that he was confident that supplies to consumers would not be affected by the dispute between Russia and the Ukraine over payment for gas, and added that reserves in EU countries were at between 70 and 90 per cent capacity.

An early resolution to the dispute seemed unlikely however as Gazprom last night hardened its position by threatening to increase the price at which it sells gas to Ukraine.

The Czech Republic, Turkey, Poland, Hungary, Romania and Bulgaria have already revealed that they have suffered drops in supply of between 5 and 30 per cent. Greece said today that its pressure had fallen by up to a third, although the European Commission said that it had yet to be officially notified by Greece that it was experiencing difficulties.

The dispute was triggered on New Year’s Day when Gazprom cut the flow of gas to Ukraine after its existing contract expired and the two sides failed to reach agreement on a new deal.

Ukraine is the main transit route for Russian gas pipelines to the European Union, which relies on Moscow for about a quarter of its supply. It has been accused of siphoning off gas destined for other European customers. Big consumers such as Germany have yet to be affected but if the dispute continues it could result in energy cuts across Europe in the middle of winter.

Last Friday a Ukrainian delegation visited Prague and other European capitals to explain Kiev’s point of view. The Czech Republic, which holds the presidency of the EU, then indicated that it was reluctant to be dragged into what it said was a purely bilateral trade issue unless Europe started to feel the effects – but as countries in eastern Europe began to report falling pressure, the Czechs changed their stance.

EU ambassadors were meeting in Brussels this afternoon to discuss the crisis.

The international arbitration court in Stockholm may also be called in to decide whether Kiev owes Moscow fines for failing to pay its bills on time. Relations between the two have been increasingly hostile since the Orange Revolution in Ukraine in 2004, with each accusing the other of “energy blackmail”.

Urmas Paet, the Foreign Minister of Estonia – which has had numerous disputes with Russia – said yesterday that the EU had to find alternatives to reduce its dependence on Gazprom. Acknowledging, however, that there were few alternatives at present, he said the EU should think about how to influence Russia and Ukraine. “It is abnormal when presidents negotiate a gas price,” he said.

He was referring to President Medvedev of Russia and Vladimir Putin, the Prime Minister, finding themselves spending New Year’s Eve in the Kremlin, talking about household bills. President Yushchenko of Ukraine kept more of a distance from the argument, saying that he expected it all to be solved by Orthodox Christmas on January 7.

That, however, may be wishful thinking: Moscow’s 2009 price offer of $250 (£170) per 1,000 cubic metres of gas – which Mr Putin said was “humanitarian”, and which was offered to Ukraine for “fraternal” reasons – has since been withdrawn. Kiev was then asked to pay the “market” price of $418 per 1,000 cubic metres. Yesterday Alexei Miller, head of Gazprom, threatened to raise the price to $450.

Ukraine has said that, with global energy prices falling, it is not prepared to pay more than $235. It also rejected fines of $600 million imposed because its payments for November and December failed to reach Gazprom’s bank account before close of business in 2008.

Moscow, long at odds with Ukraine over its neighbour’s ambition to join NATO, has accused Kiev of stealing gas intended for Europe, but Ukraine has alleged Russia was cutting flows by more than half through a key export pipeline.

A similar gas row briefly disrupted supplies to Europe three years ago. That crisis prompted calls for the European Union to diversify its energy supplies, but it has struggled to break its reliance on Russia.

Many European countries did however build up reserves of gas after 2006 and there is no immediate threat of a complete cut-off – but the longer the stalemate lasts, the greater the risk of an emergency.

Greek natural gas operator DEPA said it would receive only 4 million cubic metres of gas from Russia daily compared with its request for 6 million, although it would cover the shortfall from other suppliers.

Croatia, which imports 40 percent of its annual gas needs, most of it from Russia, also followed the Czech Republic, Turkey, Poland, Hungary, Romania and Bulgaria in saying deliveries had been affected by the row. “Imports of Russian gas have been reduced by 7 percent,”, Ivana Markovic, a senior official with Croatian pipeline firm Plinacro, told state television.

January 5, 2009
David Charter and Helen Womack

Source: The Times

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