Saturday, January 3, 2009

Europe Natural Gas Supply in Limbo?

Jan. 2 (Bloomberg) -- Poland and other European consumers of Russian gas transported through Ukraine have so far seen little change in supplies after OAO Gazprom cut off deliveries to the former Soviet state yesterday in a price dispute.

In a similar conflict in 2006 some clients, including Hungary and Italy, registered shortfalls in shipments in the shutoff, which lasted for more than two days.

Western Europe gets most of its Russian gas via pipelines through Ukraine. Russia and Ukraine are preparing to resume talks and Ukrainian Prime Minister Yulia Timoshenko gave assurances there will be no disruption of natural-gas supplies to the European Union, the EU’s executive branch said Dec. 31. Timoshenko made the assurance in a call with European Commission President Jose Barroso, the EU said.

“There’s no change in gas volume in the European Union” this morning, European Commission spokeswoman Christiane Hohmann said by phone from Brussels, citing the Network of Energy Security Correspondents, which pools energy information. NESCO was set up by the EU in 2007 to improve information and provide early warning of threats to energy supplies.

Polskie Gornictwo Naftowe I Gazownictwo SA, Poland’s largest gas distributor, said Russian gas supplies via Ukraine were down and that deliveries via Belarus had risen.

Polish Supplies

“Poland’s gas needs are fully covered,” state-controlled Polskie Gornictwo said in an e-mailed statement. Supplies at the Ukrainian border dropped by about 6 percent at 5 p.m. local time today, the statement added.

Poland receives 14 million cubic meters of gas a day via Ukraine, more than 30 percent of its imports from the former Soviet Union.

In Hungary, which saw deliveries fall as much as 35 percent in the 2006 dispute, there was a drop of pressure detected at the border, but no decline in the amount delivered so far, Edina Lakatos, a spokeswoman for Mol Nyrt. unit FGSZ Zrt., which operates the country’s gas transmission network, said by phone.

Lakatos said Ukraine had notified Mol that it planned to cut deliveries by 5 million cubic meters a day, but added Hungary could replace the missing amount from reserves.

Germany is the largest importer of Russian gas, getting 37 percent of its fuel from Gazprom. Supplies to Essen-based E.ON Ruhrgas AG, the gas unit of the country’s largest natural gas supplier, were “as normal today,” spokesman Helmut Roloff said.

Slovakia and the Czech Republic today said their supplies have so far been unaffected. Italy said it can meet any short- term demand from storage and could, if necessary, increase supplies from Algeria.

Algerian Option

Italy, Europe’s third-largest market for the fuel, has enough stored gas to meet its needs, said an official from the Industry Ministry, who asked not to be identified by name. If necessary the country can increase deliveries from Algeria to meet demand, he said today.

Slovakia’s Slovensky Plynarensky Priemysel SP, which transported 73 billion cubic meters of gas in 2007, more than 12 times the country’s own consumption, said shipment of Russian gas through its pipes is unaffected.

Other customers also reported normal flows.

“The Czech Republic will receive 100 percent of natural gas shipments today,” Martin Chalupsky, the spokesman for Prague-based RWE Transgas AS, said by phone today. “We have been reassured both by Gazprom and Ukrainian officials that there won’t be any long-term disruptions to gas supply.”

-- With reporting by Peter Chapman in Brussels, Brian Parkin in Berlin, Balazs Penz in Budapest, Adam Freeman in Rome, Radoslav Tomek in Bratislava, Lenka Ponikelska in Prague, Katya Andrusz and Katarzyna Klimasinska in Warsaw and Fred Pals in Amsterdam. Editors: Guy Collins, Shaji Mathew

To contact the reporter on this story: Rob Verdonck in London

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