Wednesday, May 22, 2024
 
 

Gas Ender’s Game

EU Fears Another Russian-Ukraine Gas War

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ATHENS – Fresh Gazprom demands for Kiev to pay its overdue bills have sparked fears the Russian gas monopoly may cut gas supplies to Ukraine, fuelling talk of an imminent Gas War that might disrupt gas flows to Europe.

But International Center for Petroleum & Industrial Management (ICM) General Director Hans Hutta told New Europe that Russia, Ukraine and the western Europeans would avoid another Gas War.

“It will work out itself again. It’s a political game; it has to work out. It’s in nobody’s interest to have a crisis,” the director of the Vienna-based group said in Athens on 31 October.

“It’s rightful demand for payment – just powerplay. I don’t know if it’s political or they [the Ukrainians] have no money. It’s something that has to be negotiated – it will be negotiated, I’m sure,” he said on the sidelines of a regional conference on Hydrocarbon Exploration and Production in the Adriatic, the Black Sea and the East Mediterranean organised by the Institute of Energy for South-East Europe (IENE).

However, Russia is already looking at ways to ease its dependence on transit through Ukraine with the South Stream gas pipeline being built, Hutta said. On 1 November, Gazprom CEO Alexei Miller and Bulgaria’s Economy Minister Dragomir Stoynev gave the go-ahead to the construction works of the Bulgarian sector of South Stream via a video conference link with the Rasovo compressor station.

But Ukraine won’t stay idle. The former Soviet republic is actively exploring for hydrocarbons in blocks of the Black Sea shelf. “The reserves have not been proven, but there’s a lot of exploration going on,” Hutta said, adding that the only discovery in the deep waters in the Black Sea is Domino 1 on the Romanian side.

“It depends what these blocks will produce,” he said, referring to Ukraine’s exploration efforts. “The next discovery in the Black Sea, if there is one, whether it’s in Turkey or whether it’s in Ukraine will change the picture,” he said. “And, of course, there is a lot of geological potential.”

Last week in Yalta, Council of Ministers of Crimea Chairman Anatoliy Mogilev said the gas price that Kiev is paying Russia at the moment is “very detrimental to Ukraine”. “Our key industry sectors that provide exports – the chemical industry and metallurgy – are very high in gas consumption,” Mogilev told reporters in Yalta, responding to a question from New Europe.

“All the Ukrainian efforts are focused on finding alternative gas sources and increasing the domestic has production,” he said. “This year the gas production has grown a lot. Also, we try to identify the technologies that will help us to use wind power most extensively. Solar power stations allow us to save more than 10 billion cubic metres of gas,” he said on the sidelines of the IV International Black Sea Economic Forum on 24 October.

Meanwhile, Russian-Ukrainian negotiations are everyone’s concern. London’s Seven Investment Management Director Justin Urquhart Stewart told New Europe by phone on 30 October that a new gas crisis “is almost inevitable”. “If we have another cold spell, which we will have, be wary of these taps being turned off at short notice,” he quipped.

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

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