EU in grip of severe cold, facing gas supply crunch

Malaysia Sun Friday 3rd February, 2012

BRUSSELS - Several countries in Europe are facing gas supply crunch with severe cold weather driving up demand and drop in Russian supplies via Kiev, raising fears of a repeat of the 2009 crisis.

The European Commission said flow was below normal in Poland, Slovenia, Austria, Germany, Hungary, Bulgaria, Romania, Greece and Italy.

"I can confirm that there has been a decrease in gas deliveries in various member states: Poland, Slovakia, Austria, Hungary, Bulgaria, Romania, Greece and Italy," EU energy spokeswoman Marlene Holzner said at a regular news briefing.

"Yesterday, we saw in Austria a decrease of 30 per cent, Italy of 24 per cent and Poland 8 per cent. But I must also say that it's not a situation of emergency yet."

All member states had so far been able to secure gas from other sources, either from storage facilities or substituting supplies with liquefied natural gas (LNG), Holzner said.

The news prompted a new row between Russia's Gazprom and the Ukraine.

A severe cold blast, blamed for more than 100 deaths, is lashing the continent, bolstering demand for heating and forcing countries to tap stored gas supplies.

Reduced supply of Russian gas via Ukraine has raised EU fears of a repeat of the gas crisis in 2009, when supplies to Europe were suspended for about two weeks because of political tensions between Moscow and Kiev.

Following the 2009 gas crunch, EU member states created special reserves, but it may not be adequate to meet demand in case of further decline in supplies. There are signs the 2012 crunch could also get nasty.

On Thursday, Russian gas export monopoly Gazprom said it was sending as much gas as it could spare to Europe, and that Ukraine, whose pipelines carry Russian gas to the EU, must be taking more than its contracted share. Kiev has flatly denied doing so.

The observed decrease in Russian gas flows to Europe does not necessarily mean that Gazprom has breached its contract.

European countries are currently using alternative sources of gas, including extracting gas from storage.

The Commission said its gas coordination group was monitoring the situation.

A Commission spokesperson told the BBC that member states should have supplies to last 30 days in the event of an interruption.

"We have mechanisms on a European level in times of crisis, but we're not in a crisis," said a Commission spokesperson.

"Of course it depends how the situation evolves and of course how the weather forecast looks like."

The supply crunch has led to a sharp increase in gas price in Europe.

Analysts said it was too early to gauge the impact on domestic energy bills, which will depend on how much gas is taken out of storage and therefore has to be replaced later in the year.