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Russian-European gas row gains momentum

February 06, 2012, 17:08 UTC+3
1 pages in this article

Russia’s gas giant Gazprom keeps reducing gas supplies to its European consumers. It has already defaulted on effective contracts with nine countries. Prime Minister Vladimir Putin approved of the monopoly’s actions. And experts have been saying that this type of policies in the energy sector might harm relations with Europe and accelerate construction of gas pipelines from Asia to Europe bypassing the Russian territory.

Gazprom, which has always guaranteed the continuity and reliability of the Russian gas supplies to Europe acknowledged that due to low air temperatures in Russia it failed to honor the effective export contracts with Italy and Poland, says Kommersant. Prime Minister Vladimir Putin was briefed on that, but he did not criticize the monopoly. Moreover, he praised it for putting the emphasis on gas supplies to the Russian consumers in the pre-election period. This type of energy policies may worsen the relations with Europe  and lead to fines against Gazprom, as well as faster work to construct gas pipelines from Asia to Europe outside of  Russia.

Gazprom recognized for the first time ever that in case of peak loads it is unable to meet both European and domestic demand for gas. So far the gas monopoly said that Europe had been demanding gas supplies in excess of the contracted amounts, the daily says. Now it turned out that Gazprom itself is unable to honor its contract liabilities, although the daily production (1.6 billion cubic meters) and the retrieval of gas from underground storages (630 million cubic meters) are at a record-high.

There has never been anything of the sort so far, says the chief of East European Gas Analysis, Mikhail Korchemkin. Even during a far harsher winter, that of 2006, Gazprom honored its liabilities. But the gas monopoly has since considerably reduced the import of gas from Turkmenistan (from 40 billion cubic meters to 10 billion cubic meters a year) and its two westbound pipelines (Orenburg-Western border and Orenburg-Novopskov) with a capacity of 50 billion cubic meters a year are operating below capacity. In the meantime, the pipelines from Yamal, where 90 percent of Gazprom’s gas is extracted, are packed to capacity and this is the system’s bottleneck. With the commissioning of Nord Stream last autumn the potential export capabilities of Gazprom reached 210 billion cubic meters, but in reality they are not enough even for the export of 180 billion cubic meters Gazprom’s deputy CEO Alexander Medvedev had declared. Slow development of the system of underground gas storages in recent years has made itself felt during the cold season, says the expert. As a result Gazprom is unable to comply with its contracts.

Gazprom explains that the expectations of its foreign clients are too high, says RBC. The European consumers have been asking for extra supplies of gas, said the chief of the contracts structuring and pricing department of Gazpromexport, Sergei Komlev, adding that the company had no obligations to provide extra gas. In the meantime, Gazprom’s European clients argue that the monopoly fails to provide the amount of gas that it should. Germany’s RWE has told the daily that the company was currently getting 30 percent less the maximum amount the contract with Gazprom envisages.

By tradition Ukraine was pointed out to be a number one culprit, says Nezavisimaya Gazeta. Last Thursday Gazprom announced that due to the cold weather Ukraine was taking far more gas than it can have under the contract – at about an annual amount of 60 billion cubic meters. Naftogaz Ukrainy replied that the consumption of Russian gas did not exceed the contract level. Kiev said again that it guaranteed the full transit of gas to Europe.

Independent experts have no doubt the whole affair will make the Europeans more certain that they should ease their dependence on Russian gas, says Novyie Izvestia. That not enough fuel reaches Europe, in their opinion, is a result of surging consumption amid harsh frosts. In general, this is unlikely to better Gazprom’s image, says the daily. As follows from a statement by the European Commission, the EU may well give up the idea of financing the construction of the South Stream pipeline in favor of gas import from North Africa and investments into Poland’s shale gas.

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