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Europe Starts To Feel Gas Shortages as Russia and Ukraine talk

by Yuliya Talmazan | January 8, 2009 at 12:57 pm

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Negotiations over renewing the supply of Russian gas to Ukraine have been on and off since the end of December, but no resolution is in sight as Naftagas and Gasprom continue to battle it out for the mutually acceptable gas price. Tempers flared and accusations of political play flew abound without any resolve, ultimately leaving Russia’s European partners in the cold. Literally. Eighteen European countries that normally receive gas from Russia are suffering from gas transit disruptions that Ukraine has allegedly initiated as the result of gas dispute with Russia. These actions prompted Russia to shut down all gas transit through Ukraine, which aggravated the gas situation in Europe even more.

Today new developments have surfaced. Russia is now promising to restore gas supplies to Europe through Ukraine provided international monitors are put in place. It is a first step forward but it is not alleviating the immediate inconvenience that Russia’s European clients have to experience as the result of the dispute.

Countries particularly badly hit as the result of the gas dispute are Slovakia and Bulgaria. Slovakia is on the brink of declaring a state of emergency. EU is even considering allowing Slovakia to reopen its nuclear reactor to provide central heating, if worst comes to worst and the dispute continues for a long time. Bulgaria was forced to shut down its kindergartens, hospitals and businesses due to inadequate heating. Many other countries have no more than a weekly supply of gas left in the reserves. In Ukraine itself, chemical producers had to halt production due to the shortage of fuel.

Meanwhile, Europe is dealing with bitter cold weather, which makes the disruptions of gas supply very untimely. Many fear extensive use of heaters to substitute for gas may overwhelm the electric grids in affected countries.

Russia said on Thursday it would restore gas supplies to Europe through Ukraine once international monitors were in place.

Gazprom CEO, Aleksey Miller, gave a news conference in Brussels confirming that a consensus had been reached. Miller also stressed that resolving gas transit is in the best interests of Russia, Ukraine and the EU.

“The most important thing is that Ukraine allows independent observers to its gas transportation systems. During our discussions, we have stressed that it is necessary to restore transit through Ukraine as soon as possible,” Miller said.

Kiev has signed an agreement with the European Union to allow observers into Ukraine to ensure that Kiev is not siphoning off fuel.

Previously, Kiev blocked outside observers from monitoring gas flow in and out of the country. The observers are expected to arrive to Ukraine on Friday.

Slovakia, on the other hand, was forced to declare a state of emergency because of shortages. There has even been talk of re-opening a Soviet-era nuclear power plant, the closure of which had been a requirement for Slovakia joining the EU.

Similarly, Bulgaria is experiencing significant problems, reporting that thousands of households have been left without heating in the freezing cold. Dozens of factories have also been forced to cut production.

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dadburnham

at 13:46 on January 8th, 2009

So far Ukraine has gone 8 days without gas from Russia, but we've still got gas coming in from reserve tanks. How much longer? No one is really sure.

dadburnham has contributed a photo to this story.

Paschen

at 21:35 on January 8th, 2009

Well, it is about unpaid bills from the Ukraine. And will only get solve if the Ukraine either pays up or the EU ends up paying for them. Some thing the EU is really not looking forward to. Well Russia could forgive part of the dept as well and would to if the Ukraine would give up NATO ambitions and not try to join the EU.