Ukraine's gas row could mean cold winter for Central, East Europe

PanARMENIAN.Net - Central and south-eastern Europe could face higher gas prices and potential shortages this winter, as a prolonged price row between Russia and Ukraine heightens regional supply fears, Reuters said.

The former Soviet countries, many of which receive most or all of their gas from Russia via Ukraine, have been scrambling to fill storage tanks and arrange alternate supply sources to prepare for the winter heating season.

In June, Russian natural gas exporter Gazprom cut off gas deliveries for use by Ukraine in a dispute over unpaid bills, raising concerns of a disruption of supplies to the rest of Europe.

So far, Ukraine has continued to send gas to the European Union under transit obligations it has with Russia and EU member states.

Western Europe is well prepared to deal with Russian gas flow disruptions, with access to alternative supplies such as Norway and Algeria or imports of liquefied natural gas (LNG).

But for countries in central and south-eastern Europe the dispute has rekindled memories of 2006 and 2009 when a pricing disagreement prompted Russia to cut off deliveries along the Ukraine pipeline, leaving hundreds of thousands of homes and businesses without heat in freezing temperatures.

They rely largely on Russian gas imports via Ukraine and would be hit hard by another winter gas cut-off. Problems could come if Russia shuts off all flows via Ukraine or if Ukraine takes deliveries meant for the West to meet its own demand.

Another potential threat is an attack on the pipeline stemming from the fighting in the country between the government and pro-Russian activists in the east. A June blast on the pipeline caused no casualties and did not interrupt flows but Ukraine called the explosion a possible "act of terrorism."

"The 'no gas via Ukraine' scenario is the baseline scenario for this year and a few more," said Vaclav Bartuska, the Czech Republic's top official on energy security.

"There is instability which will not go away tomorrow. This is not a gas crisis but a war plain and simple."