Doris Leblond
OGJ Correspondent
PARIS, Jan. 4 -- Despite the signing Jan. 3 of a 5-year deal between Russia's OAO Gazprom and Ukraine's Naftogas, Europe's confidence in the reliability of Russian gas supplies has been seriously eroded. The contract has ended Russia and Ukraine's price conflict as well as a 2-day disruption to Europe's supplies of Russian gas (OGJ Online, Jan. 4, 2006).
In the aftermath, Europe is riddled with new thoughts about gas supply security.
The Austrian presidency, which on Jan. 1 took over leadership of the European Union for the next 6 months, welcomed the "swift and positive" conclusion to the conflict, which interrupted for 2 days the transit of Russia's gas exports through the Ukrainian gas line to Europe.
The signed contract, effective Jan. 1, is based on a price of $230/1,000 cu m. But Ukraine's Naftogaz said it would be paying $95/1,000 cu m for gas from Russia and from Central Asia. The difference comes from a weighted average price between cheaper and larger quantities of gas from Turkmenistan and the gas from Russia.
Naftogaz also said that the transit tariff of the Russian gas to Europe will be raised from $1.09/1,000 cu m/100 km to $1.60/1,000 cu m/100 km. But the deal could be changed if circumstances change, point out observers.
Ukraine had been paying $50/1,000 cu m. The conflict broke out through Gazprom's insistence on an immediate quadrupling of this price and Naftogaz's subsequent refusal to pay the increase. Gazprom cut off supplies to Ukraine and accused Ukraine of "stealing gas" from the transit gas line: some 104 million cu m on Jan. 1 and another 118 million cu m Jan. 2.
Diversifying supplies
At a press conference Jan. 4 in Brussels after the meeting of the Gaz Coordination Group, both Austria's Energy Minister Martin Bartenstein and EU Energy Commissioner Andris Piebalgs insisted on the need to diversify Europe's pipeline system and to "diversify supplies as far as we can," Bartenstein said, adding, "Using Turkey will bring more security to the market." He said that, although Russia would remain the EU's main gas supplier, recent events will serve to give high priority to energy during Austria's presidency.
Piebalgs pointed to the "benefits of the energy dialog with both Russia and Ukraine to get our views across effectively" and help resolve the crisis. But he also said that Europe needs a "clearer and more collective and cohesive policy on security of energy supply," which so far has been considered on only a national level. A communication would be released in the spring on a new European energy policy, and before yearend, final conclusions and proposals would be drawn, he said.
The gas crisis also brought second thoughts to the governments of Poland and Hungary over the need to rely less on Russia's gas through construction of LNG terminals and gas storage facilities. Poland said it would review a recent vote of the country's deputies against a pipeline linking Poland and Norway.
Hungary is determined to draw up by July a policy for the next 20 years aimed at reducing the country's dependence on Russian oil and gas. This could include a project to build a 1.2 billion cu m gas storage facility by 2010 as well as further storage and infrastructure to receive LNG from North Africa via the Adriatic Sea.
