EU GAS SHORTAGES
Bulgaria, Finland and Estonia could suffer major gas shortages if Russia cut off all its gas deliveries for six months, according to a report released Thursday by the European Commission.
The first stress tests for the energy sector mapped out how European gas supplies would be hit if there were a total supply shutdown by Russia.
The EU's energy chief, Günther Oettinger, said that while he didn't anticipate there would be such a dramatic move by Russia, the tests showed the extent to which countries would need to pool their energy resources to avoid shortages, perhaps by sending gas to countries most in need.
Mr. Oettinger said he didn't doubt Russia would meet its contractual obligations. "But we also need to show [Russia] that we're prepared for a worst-case scenario."
A far more realistic scenario is that Ukraine, which is the main transit route for Russian gas to Europe, would cease to pass on that gas if it faced major shortages itself.
Russia's Gazprom gas monopoly cut off gas supplies to Ukraine on June 16 after efforts to settle their gas price dispute broke down. The move raised concerns that Europe could suffer a repeat of events in 2006 and 2009, when Russian gas cuts to Ukraine led to shortages in EU countries at the height of winter.
Mr. Oettinger said he was "cautiously optimistic" that a temporary truce could be brokered when the two sides meet for fresh talks in Brussels on Tuesday. But he said it was vital that some EU countries put in place contingency measures in case of shortages. "If we work together, show solidarity and implement the recommendations of this report, no household in the EU has to be left out in the cold this winter," he said.
In a worst-case scenario, in which Russian gas supplies were stopped entirely for six months, Bulgaria, Romania, Finland and Baltic countries such as Estonia and Latvia could face severe shortages of between 40% and 100%, relative to their overall gas supplies. Those countries would likely have to put in place emergency measures to protect consumers, such as reducing consumption for factories and other heavy energy users and strike deals with neighboring countries to get extra gas or electricity.
Some of the shortfall could be made up by ramping up liquefied natural gas imports, the findings say, though EU countries would likely pay a far higher price for those deliveries than for Russian gas because of high demand in Asia. Qatar, Algeria and others could boost LNG exports by 7%, while Norway—the EU's second-biggest gas supplier—could also boost production to supply up to 17% of the EU's gas, up from 13% currently.
Keeping gas storage sites topped up could also play a big part in lessening the impact. EU countries have been urged to stock up in recent months and most have storage sites filled to 90% or more.
Experts say the EU is far better positioned to deal with any possible cuts this winter than it was in 2009 during the last gas dispute between Ukraine and Russia. There are now many more energy interconnectors and LNG terminals have been built along Europe's coastline. New ones are due to launch this winter in Poland and Lithuania.
But the report warned that a lot more infrastructure would need to be put in place to feed energy to those countries most dependent on Russian gas.
The EU received 39% of its gas imports from Gazprom last year, about half of which was transported by pipelines through Ukraine.
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