(Initially published in http://www.romania-report.ro/ -- Jan 2, 2006)
Bucharest, Jan 2 – The gas price dispute between Russian and Ukraine resulted into a 25 point decrease in gas deliveries to Romania, even if Romania is paying the highest price in Europe to Gasprom (the Russian state-controlled gas exporter).
AP reports that gas supplies to much of Europe fell sharply Monday in the fallout of Moscow's pricing dispute with Ukraine while several nations urged energy-hungry industries to switch to oil. Gazprom, the Russian state-owned natural gas monopoly, began reducing supplies to Ukraine yesterday after Kiev refused to agree to a price hike from $50 dollars to $230 dollars per 1,000 cubic metres.
Despite the dispute, gas prices rose only marginally on Monday on world markets.
Still, with the 25-nation European Union counting on Russia for a quarter of its natural gas needs -- mostly through Ukraine -- concern rose that a prolonged standoff could spell severe problems. The German government urged Russia and Ukraine to compromise quickly in order to resolve their dispute over natural gas deliveries.
Russia took over the rotating presidency of the ‘Group of Eight’ most wealthy nations on Sunday, with President Vladimir Putin looking to convert his country's energy wealth into political influence.
East European countries -- many with a record of decades of energy dependency on Moscow established during a half century of domination by the former Soviet Union -- were the most hurt Monday.
Hungary reported gas supplies down by 40 percent after Russia's OAO Gazprom cut deliveries to neighboring Ukraine, which acts as a transit country for most of Russia's gas consignment to Europe. Russian gas amounts to about 80 percent of Hungary's needs.
MOL, the country's national wholesaler, said households would not be immediately threatened but joined providers in other nations in urging major industrial consumers to switch to backup oil systems. And MOL official Sandor Kantor said his company was cutting deliveries southward to Serbia and Bosnia-Herzegovina.
Serbia said it was receiving 50 percent less gas than normal. Aleksandar Kosadinovic, deputy director of Srbija Gas, the main distributor, said hospitals, schools and other vital consumers were being given priority.
Polish Economy Minister Piotr Wozniak said gas deliveries at the Polish-Ukrainian border had risen to about 65 percent of the daily norm, from a low of 50 percent on Sunday.
Apparently referring to fears of a complete collapse in deliveries from Russia, Economy Minister Pitor Wozniak said the country had stocks of “seven or eight days.”
In Austria, the OMV energy conglomerate said that natural gas imports from Russia via Ukraine were down by a third over usual levels. Slovak state oil company official Alexander Nemudrov told Russia's Gazprom-owned NTV television on Monday that it was receiving just 60 percent of the gas it needs to export further West.
A leading German importer of Russian gas, Wintershall AG, said it was seeing a noticeable reduction in the amount of gas arriving via Ukraine. And the E.On Ruhrgas natural gas distributor said deliveries to big businesses could be crimped by the dispute.
German industry can draw on stocks holding up to 75 days worth of gas as well as imports from other countries such as Norway and the Netherlands, economy ministry spokeswoman Sabine Maass said.
Italy and other nations with diversified gas sources were less affected. But oil and gas giant Eni Spa on Monday was measuring a «considerable reduction» in the pressure of the gas flow from Russia, Italian news agencies reported.
The crisis comes amid a harsh winter that has blanketed most of northern and central Italy in snow and already depleted the country's gas reserves.
«In the long term we cannot afford to give up» Russian natural gas, said Eni chief executive Paolo Scaroni.
Norway's Statoil ASA -- a major North Sea producer -- cautioned other European countries that it was not able to provide relief.
“We already are producing as much as we can, so there's not much we can do to meet a shortfall,” said spokesman Ola Morten Aanestad.
The gas dispute was the focus of a planned meeting of European energy officials set for Wednesday in Brussels. In announcing the meeting Friday, EU Energy Commisioner Andris Pielbalgs said the EU's Gas Coordination Group would deal “with all eventualities.”
Rep. of Moldova has not received Russian gas supplies for two days, said President Vladimir Voronin, saying that prices had inexplicably doubled, making it too expensive for the former Soviet republic to renew a contract with Russian company Gazprom.
Romania's deliveries from Russia were down by 25 percent, said officials, but unseasonably warm weather eased immediate concerns. Romania is importing from Gazprom some 40% of its overall needs (i.e. 3-3.5 billion cubic meters), at a price of $285 per 1,000 cubic metres. This price is by far the highest paid by a European state. Due to the circumstances, the Romanian Minister of Economy, Codrut Seres, sent a formal letter, to the Russian authorities, which reads that the Romanian counterpart requires that the gas deliveries to keep up with the provisions of the contract signed last November (the then contract sealed an increase of the Russian gas price from $252 to $285/’000 cubic metres).
As ‘Romania-Report’ previously said (on Dec 29, 2005), “Ukraine’s gas supplies were practically subsidised by Russia and the possible end of such subsidising would lead to its economical collapse eventually – not to mention what disastrous consequences a Russian-Ukrainian energy dispute would bring to the freshly ‘post-modern’ Europe.”*
Starting with 2006, as based on its energy resources, Russia seems to redefine its global role.
Romania Report & sources
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*) See report below: The ‘Post-Modern State’ and the need for ‘Empire’
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