“This very peculiar episode” is over

Gas is again flowing from Russia to the EU via the Ukraine. On Jan-20, EU monitors reported that gas was flowing normally from Russia, that pressure building up in the system and gas flowing to Slovakia. It will take up to 36 hours for normal supply to be resumed.

Gazprom, the Russian state owned monopoly, opened up the valves at 10:24 Moscow time (07:24 GMT). This followed the signing of a 10-year contract in Moscow by Vladimir Putin, the Russian prime minister, and Yulia Tymoshenko, his Ukrainian counterpart. The Ukraine will pay the market rate for gas from 2010. There will be a 20 percent discount for the rest of 2009 if the Ukraine continues to charge low transit fees for gas transhipped to the EU.

Intermediaries that both sides had accused of siphoning off millions of dollars of revenue have been frozen out of the deal.

European Commission President, Jose Manuel Barroso, said in Brussels on Jan-20 that, “This very peculiar episode is over. Let’s hope it’s over.”

The EU left in the cold
Gazprom suspended deliveries to the Ukraine on Jan-1 in a dispute ostensibly over non-payment and prices. All gas to the Ukraine was suspended on Jan-7 when Russia accused the Ukraine of siphoning off gas destined for the EU for its own use.

For 13 days EU leaders attempted to broker a compromise deal, whilst some parts of the EU, notably Bulgaria and Slovakia froze with no gas deliveries.

Commenting on EU energy security Barroso said:

It was utterly unacceptable that European gas consumers were held hostage to this dispute between Russia and Ukraine.

This painful episode is a sharp reminder that the EU needs to take energy security seriously.

Gas coming from Russia is not secure. Gas coming through Ukraine is not secure. This is an objective fact.

However, Vladimir Chizhov, The Russian ambassador to the EU disagrees,” The EU has no reason to distrust Russia,” he said.

The new Nabucco pipeline
This new pipeline is proposed to run from the Caspian Basin to the EU through Turkey. Some see it as a way reduce reliance on Russian gas. The plan took a double hit this week.

On a visit to Brussels on Jan-19, the Turkish prime minister, Recep Tayyip Erdogan, said Turkey may reconsider its position on Nabucco if negotiations for Turkey’s accession to the EU continued to be delayed.

Turkey began candidate

talks in 2005. It is unlikely that they will be completed before 2014. Turkey has become increasingly frustrated at the pace of progress.

On the same day experts told the European Parliament they doubted whether there would be enough gas to fill the pipeline. Iran, starved of investment and currently under sanctions, is a net imported of gas. Turkmenistan would prefer to sell to Russia or China.

Hungary will host a, ‘Nabucco summit’ in Budapest on Jan-27.

Energy security now an EU priority
Barroso wants to make energy security a priority at the March meeting of EU state leaders. He said:

Now we have to be serious about diversifying and investing in Europe’s energy security future.

Energy security begins at home. Energy efficiency, renewables, all means of cutting back on carbon emissions, will become even more important in the future.

Image: www.tymoshenko.com.ua

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