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News to Ponder 1-6-2008

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  • News to Ponder 1-6-2008

    No comment needed on this. Let your mind wander on what this one means

    Russia, Ukraine Dispute Leaves European Nations Without Gas

    KIEV, Ukraine
    — At least two Bulgarian cities were totally without gas Tuesday, and nations like Turkey were turning to Iran to bolster their supplies, as a natural gas crisis looms over Europe after a contract dispute between Russia and Ukraine led Russia to shut off gas supplies to seven countries and reduce gas deliveries to several others.

    The shortfalls came one day after Russian Prime Minister Vladimir Putin ordered Alexei Miller, chief executive of the Russian state gas company Gazprom, to cut supplies shipped through Ukraine by amounts equal to those Russia claims Ukraine has "stolen," AFP reported.

    "Start reducing it from today," Putin told Miller in a meeting at Putin's residence.

    Russian gas shipments via Ukraine to Hungary halted, Reuters reported, and the Hungarian government said it would ask some power plants to switch to alternative fuel by Wednesday.

    Miller told Putin on Monday that Ukraine had since Jan. 1 "stolen" 65.3 million cubic meters of gas that were supposed to have flowed through Ukraine into Europe, AFP reported.

    Miller said the debt Ukraine owes Gazprom is still above $600 million, but said: "If they continue to illegally take gas it will soon be billions."

    In response, Russia and Ukraine agreed to hold new talks on the contract dispute over Russian natural gas that travels to Europe through Ukraine's pipelines. The two neighbors are locked in a dispute over pricing and overdue payments. Russia cut off supplies to Ukraine on Jan. 1 but had promised to keep gas moving to Europe.

    The head of the Ukrainian gas company Naftogaz, Oleh Dubina, said he would travel to Moscow on Thursday for new talks. He made the decision after speaking to Miller.

    "Given the crisis situation, we are ready to start talks at any moment," said Gazprom spokesman Sergei Kupriyanov.

    Wednesday is Orthodox Christmas, a holiday in both Russia and Ukraine.

    The energy dispute sharply escalated Tuesday when six countries on the other end of the pipeline network running from Russia through Ukraine reported a complete shutoff. Russia supplies Europe with about a quarter of its gas, 80 percent of which is shipped through Ukraine.

    Hungary, Bulgaria, Greece, Macedonia, Romania, Croatia and Turkey all reported a halt in gas shipments. Croatia said it was temporarily reducing supplies to industrial customers and urged consumers to use gas sparingly in their homes. Bulgaria said it had enough gas for only "for a few days."

    Bulgaria's President Georgi Parvanov said the country could start immediate preparations to relaunch Unit 3 of its Kozlodui nuclear power plant. The aging two 440-megawatt reactors were shut down two years ago, and Parvanov said one of them could be opened within a month.

    Two cities in eastern Bulgaria, Varna and Dobrich, were left with no natural gas supplies on Tuesday. In Varna, on the Black Sea coast, the shortage left 12,000 households without central heating amid freezing temperatures.

    Turkey's Energy Minister Hilmi Guler confirmed the gas cutoff and said the country was trying to compensate with supplies from other sources including another Russian pipeline beneath the Black Sea.

    During a similar dispute between Ukraine and Russia in 2006, which lasted just three days, several West European countries saw their gas supplies drop by 30 percent or more. That crisis led to criticism of Russia as an unreliable energy partner and spurred talk of finding ways to diversify Europe's energy supply.

    Up to Monday, the EU has said that the dispute would not affect consumers in the coming weeks. The sudden drops Tuesday, however, increased the diplomatic pressure to find a solution.

    In a strongly worded statement, the EU complained that gas had been cut "without prior warning and in clear contradiction with the reassurances given by the highest Russian and Ukrainian authorities to the European Union."

    Other countries lost significant amounts of gas as well. Austria lost 90 percent of its normal Russian gas supplies on Tuesday — about half its total supply. It said it had three months' gas reserves but called an emergency meeting at its Economy Ministry.

    In Slovakia, gas importer SPP AS was considering declaring a state of emergency Tuesday after its gas deliveries from Russia were down by 70 percent.

    The Czech Republic and Hungary also reported significant supply drops. The Czech gas company RWE Transgas said it expects only 25 percent of its normal supplies Tuesday from Russia, while Hungary predicted its cut would be greater than the 20 percent it saw on Monday.

    Moscow and Kiev, meanwhile, blamed each other. Naftogaz said Gazprom had sharply reduced its shipments to Europe through pipelines crossing Ukraine, triggering the cuts. Gazprom accused Ukraine of stealing gas shipments intended for other nations.

    Kiev denied it was stealing Russian gas. It said was using some of its own gas as fuel to transport the rest of the Russian gas to Europe. Naftogaz says Gazprom is obliged to provide this gas but is refusing.

    Gazprom said it was sure it could provide Europe with enough gas.

    "We are confident that we will be able to get through this situation without any damage to the gas production and transit system," deputy chairman Alexander Medvedev was quoted as saying by RIA-Novosti. "The only issue is gas transit to Europe through Ukraine."

    On Monday Gazprom said it would cut the amount of gas it ships to Europe through Ukraine by 65.3 million cubic meters, or about 20 percent — the amount it accuses Ukraine of diverting from its transit pipeline network over recent days.

    Poland was considering limits on deliveries to heavy industry, even though so far Russia has compensated for shortfalls through Ukraine by shipping extra gas to Poland through a pipeline in Belarus.