EU demands deal in gas dispute, Russia promises full supplies

[Menydh]

EU demands deal in gas dispute, Russia promises full supply

EUbusiness
January 2, 2006

Austria, which holds the EU presidency, is calling for a swift resolution of the gas dispute between Russia and Ukraine, and is reassured by a Russian promise to restore fully supplies to the European market, reports said Monday.

"The vice-president of the Russian gas group Gazprom, Alexander Medvedev, guaranteed the full supply would be restored to European importers within twenty-four hours," Austrian Minister for Economic Affairs Martin Bartenstein told the Austria Press Agency late Monday, adding "if what Gazprom announced occurs, we will see an easing of the situation."

The European Union called on Ukraine and Russia earlier Monday to restart negotiations to resolve their dispute and guarantee the delivery of gas to Europe, after several member states experienced drops in supplies.

Bartenstein, quoted by the Austria Press Agency, "called on the two parties to agree on prices and most of all... to guarantee unlimited supplies to Western Europe."

Vienna and Budapest showed their concern Monday by summoning the Russian and Ukrainian ambassadors to their respective foreign ministries.

The EU's high representative for foreign affairs Javier Solana has also been in contact with the two former Soviet republics to "encourage them to restart negotiations, the only possible solution," his spokeswoman Cristina Gallach said Monday.

"The two parties' stances are not so distant," a EU diplomatic source said, adding "the Ukrainians did not reject the idea of buying Russian gas at market price, but they want to negotiate" the deadline.

The Russian state-controlled gas giant Gazprom said Sunday it would go ahead with the threat to stop supplying gas to Ukraine. It now accuses Kiev of "stealing" gas, by withholding some of the supply transiting through its territory towards Europe.

The German government called on Moscow and Kiev Monday to respect their transfer pledges and find a "sensible common solution".

The European Commission has convened a meeting of experts Wednesday in Brussels to discuss the potential effects on markets.

Eastern European countries, the first hit by the dispute, have registered a reduction in quantity at their borders, of up to 40 percent in Hungary and a similar amount in Poland. German and French import groups have also been hit.

But the range of alternatives is limited, according to experts.
Vienna wants to see the "Nabucco" pipeline project -- which will supply Western Europe with natural gas from the Middle East and Central Asia via Turkey starting in 2011 -- up and running as soon as possible.

"Nabucco would of course be an alternative in the long term, but as of now, there is no alternative to Russian gas via Ukraine," Thomas Heisenberger, an energy expert, told AFP.

Austria, which has seen gas supplies drop by about a third following the dispute, has two-months worth of gas in reserve for the winter, said Heisenberg, of the Austrian regulatory authority E-Control.

"If temperatures were to drop (...) and if supplies fell further, consumers could temporarily turn to other sources of energy, such as coal plantsbut supplies are guaranteed for the majority of clients," he said.

In joint letters Saturday, Bartenstein along with his counterparts from three other major European importing countries -- France, Germany and Italy -- had asked Kiev and Moscow to maintain Russian gas supplies to their countries, regardless of the dispute.

Hungary also talked to its three partners in the Visegrad group -- the Czech Republic, Poland and Slovakia -- as well as to Austria.


[source]