Brussels, 09/04/2014 (Agence Europe) - On Tuesday 8 April, the European Commission stressed that the European Union must strengthen its gas storage capacity and exploit other sources of energy production in order to guarantee security of supply.
The risk of a halt gas supplies passing through Ukraine, as in 2009, was the focus of two meetings chaired by European Commissioner for Energy Günther Oettinger. The first meeting (the gas coordination group) was intended to review the state of gas stocks in the EU, which are estimated at 36 billion m3, said the Commission. The second meeting (round table on security of supply) focused on the measures to guarantee the security of supply to member states. A delegation from the Ukrainian government, led by its minister for energy, Yuri Prodan, took part.
The two meetings were part of the preparation of an action plan by the Commission to enable the EU to reduce its heavy dependence on Russia for energy. The action plan will be put to the European Council in June.
“The role of storage and alternative domestic production sources need to be carefully explored in this respect”, stated the Commission in a press release.
Last year, the EU bought 133 billion m3 of gas from Russia - in other words, 25% of the EU's consumption - worth €35 billion. The price varies between €350 and €400 per 1,000 m3, according to the contracts. However, nearly half of this gas - 65 billion m3 - transits through the Ukrainian gas pipeline network.
Ukraine, for its part, consumes 52 million m3 of gas per year. It produces 20 billion m3, and buys the remaining 30 billion m3 from Russia.
Nevertheless, the security of Russian gas supply transiting through Ukraine has been compromised since Gazprom's decision to increase the price of gas sold to Ukraine from $270 to nearly $500 for 1,000 m3. Russia also wants to make the continuation of its sales to Ukraine conditional upon the settlement of a debt of $1.70 billion owed by the Ukrainian company Naftogaz and on the payment of an amount of $11.4 billion corresponding to the rebate granted over the last four years.
The EU is better armed to stand up to a halt in supplies transiting through Ukraine thanks to the improvement of its infrastructure and the possibility of reversing flows, the Commission states.
However, several EU countries remain very dependent on Russian supplies. There is 80% dependence in the Baltic States, Finland, Bulgaria, Hungary and Slovakia, according to the Commission. And 30% in Germany, Italy, Poland, Greece, Slovenia and the Czech Republic.
According to forecasts, the European states could buy a further 20 billion m3 from Norway - or a total of 119.5 billion m3 - and a further 7 billion m3 from Algeria - that is, 32.7 billion m3. They could also increase their purchase of liquefied natural gas (LNG) from 47.5 m3 to 87.5 billion m3 but this gas is much too expensive.
The US decision to market enormous quantities of shale gas should contribute to lowering the price of LNG and to putting it in direct competition with Russian gas, a European source stated. The crisis with Russia has also shown the urgent need for Europeans to invest in LNG terminals and to complete the cross-border interconnections. (LC)