UPDATE 1-EU’s Oettinger expects Russia-Ukraine gas deal this month

Interesting development…


Mon Oct 6, 2014 10:53am EDT

* EU expects Russia-Ukraine gas deal this month

* Energy stress tests show EU can handle one-month cut

* EU is “neutral” on South Stream – De Vincenti (Adds minister quotes, background)

By Oleg Vukmanovic and Stephen Jewkes

MILAN, Oct 6 (Reuters) – Europe’s top energy official said on Monday he expected an interim gas deal between Russia and Ukraine to be completed this month, enabling Russian gas deliveries to Ukraine this winter and curbing the threat of cuts to Europe.

“We should get the interim solution in October,” European Energy Commissioner Guenther Oettinger said on the sidelines of a meeting of energy and environment ministers.

The European Union is trying to broker a deal to resolve a stand-off after Russia shut off gas deliveries to Ukraine over what it said were more than $5 billion in unpaid bills.

Ukraine faces the possibility of energy shortages this winter if no deal is reached, which risks the replay of knock-on disruptions to Europe’s gas supplies seen in 2006 and 2009.

The European Commission has spearheaded efforts to get Russia and Ukraine to sign an interim gas agreement as a step towards resolving their long-standing row over prices.

Last month Oettinger said the agreement should fix an interim price for a specified amount of gas to be shipped to Ukraine, although details have been slow to emerge.


Oettinger’s comments came as he presented to EU ministers the results of stress tests, which showed that the continent’s energy systems could easily withstand a one-month halt in Russian gas transit flows through Ukraine.

“The results of the stress tests indicate we might have a few more problems if the disruption is longer than a month, but we could still cope,” Italy’s Undersecretary for Economic Development and Energy Claudio De Vincenti said.

Russia is Europe’s biggest supplier of oil, coal and natural gas, and its pipelines through Ukraine are a political focus as Europe imposes sanctions on Russia over its seizure of Crimea.

De Vincenti, who has the energy portfolio at Italy’s industry ministry, said Europe would be able to head off shortfalls in supplies from Russia by raiding gas storage, using liquefied natural gas import terminals and diversifying supplies.

He reiterated Italy’s view that the Trans Adriatic Pipeline, which will carry gas from Azerbaijan into Italy and provide Europe with its best hope of weaning itself of Russian dependence in the long run, was “very important”.

“It will go ahead for sure,” he said.

De Vincenti said the European Union was neutral on Russia’s rival South Stream pipeline, which is designed to detour crisis-hit Ukraine and boost supplies to Europe.

“There’s no hostility. We need to find a way to accommodate it with European energy infrastructure regulations,” he said, referring to EU demands that the pipeline be open to third-party access.

The $40 billion South Stream undersea gas link is still going ahead, Russian Energy Minister Alexander Novak was quoted as saying on Saturday, following concerns the European Union might be losing enthusiasm for the project.

De Vincenti said the ministers from 28 countries present in Milan had addressed in the morning the two major issues of supply security and creation of a single energy market for Europe. (editing by Jane Baird)




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