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WORLD> Europe
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Russia reopens gas pipes but little fuel flows
(Agencies)
Updated: 2009-01-13 23:23 But the European Union said "little or no gas" was flowing to Europe and that it was urging both Russia and Ukraine to release as much gas as possible. "Europe needs the gas urgently," a European Commission spokesman said.
The disruption, in which factories shut because of a lack of fuel, has dented the reputation of both Moscow and Kiev as energy sources and prompted a search for new supply routes. Russia cut off gas to Ukraine itself on January 1 after failing to reach agreement with Kiev on gas fees. A week later it halted transit flows too, saying Ukraine was stealing gas intended for Europe. Kiev accused Moscow of using energy blackmail. The resumption followed an EU-brokered deal to deploy international monitors to strategic points along the pipeline route to reassure Russia that Ukraine was not taking any of the transit gas for itself. Energy dependence Some 18 European countries suffered disruptions to their gas supplies. Eastern Europe and the Balkans bore the brunt of the problems. Bulgaria said it would ask the European Union to provide 400 million euros ($536 million) in aid to help ease its dependence on Russia, its sole gas supplier, by expanding storage and building pipeline links to Greece and Romania. Bulgaria, like Slovakia, said it might be forced to restart a nuclear reactor to produce enough electricity. Analysts say that although Russia says it was not to blame for the disruption, Moscow has suffered damage to its standing in Europe, its most lucrative gas market and biggest trading partner. Russia's state-controlled VTB bank called it a "Pyrrhic victory for Russia," adding: "Russia's image as a reliable energy supplier is hurt." Western diplomats say Ukraine's reputation has suffered too, and the economic impact could be even worse. Gazprom is demanding that Kiev hand over $614 million in unpaid gas bills and pay $450 per 1,000 cubic meters of gas in 2009 -- similar to rates paid by EU customers but a big rise on last year's price of $179.5. Ukraine is likely to struggle to absorb those costs as its economy -- based on steel and chemical exports -- has been hit hard by the global slowdown and its hryvnia currency has experienced sharp falls. Ukraine has said it has ample stockpiles of gas but it has restricted supplies to some industrial customers, a measure that could compound economic problems.
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