EU feels first gas pinch in Russia-Ukraine row

Budapest/Brussels  - The European Union reported the first impacts of the ongoing Russian-Ukrainian gas row on Friday evening as three member states in Central and Eastern Europe reported falling gas pressure in their pipelines.

Pipeline pressure is down in the main pipes leading from Ukraine into EU members Hungary, Poland and Slovakia, the Czech Republic's energy envoy, Vaclav Bartuska, told Deutsche Presse-Agentur dpa. The Czech Republic currently holds the EU's rotating presidency.

"It is so far only a decrease in pressure. The volumes (being delivered) remain the same ... The Ukrainian side told us that volumes will be down tomorrow (Saturday)," Bartuska said.

The European Commission, the EU executive, "has been informed by the gas transmission operators of Hungary and in Poland about irregularities in gas received through the Ukrainian gas pipelines," a statement released at the commission's Brussels headquarters said.

And Hungary's minister responsible for energy, Csaba Molnar, told the press that the pressure in pipelines bringing gas into Hungary from Ukraine had dropped slightly at
4 pm local time (1500 GMT).

European Commission figures said that Hungary had suffered a reduction of 10 million cubic metres out of a total contracted daily volume of 42 million cubic metres. Poland has seen a drop in supply by some 6 per cent, but this has been largely compensated by an increased flow through Belarus, the commission said.

Slovakia relies on Russia for all of its gas needs, while Hungary gets 65 per cent and Poland 46 per cent of its gas there, according to figures from the International Energy Agency in Paris.

The Hungarian government accused Ukraine of breaking the terms of its supply contract.

With temperatures well below freezing across the country, Hungary is currently burning 66 million cubic metres of natural gas per day, the storage company E. ON said.

Molnar said the drop in supply would not be felt as Hungary has 3.6 billion cubic metres of gas in storage that can be fed into the national gas network at a rate of 51.5 million cubic metres per day.

Hungary uses 13 to 14 billion cubic metres of natural gas a year, of which over three-quarters comes from Russia via Ukraine.

"So far there has been no need to restrict the use of gas by consumers, but it is quite probable that a crisis situation may develop," said Molnar.

Europe has been on high alert for gas shortages since Thursday morning, when Russian gas monopolist Gazprom shut off supplies to Ukraine in a dispute over contract terms and allegedly unpaid bills.

Three years ago, an almost identical row led to unexpected gas shortages across Western Europe. However, since then the EU has invested heavily in gas storage and diversification, leading experts to say that the shock of 2006 is unlikely to be repeated.

On Friday Gazprom said that Ukraine was syphoning off gas supplies for Europe to meet domestic demand, an accusation Kiev denied.

The EU has so far been reluctant to become involved in the dispute between its two neighbours, saying that the affair will remain a bilateral one unless supplies to EU consumers are hit.

Italy, which leads the Group of Eight major economies, will seek an energy summit in the coming months to facilitate discussion between energy suppliers and consumers, Italian foreign minister Franco Frattini said in a radio interview, news agency ANSA reported.

Commission experts "are analysing the reasons for these reductions of volumes, how they are compensated and which measures are taken to ensure the supply of the end customers," while EU Energy Commissioner Andris Piebalgs has asked all parties "for the immediate resumption of full deliveries of gas," the commission statement said.

Czech EU presidency spokesman Jiri Frantisek Potuznik told dpa that Prague will act only after the pressure drops are "confirmed on an official level." He said that the presidency is to hold urgent consultations with member states on forthcoming steps.

An EU expert group on gas supplies is set to meet with member states' representatives in Brussels on January 9. Gazprom is set to send an official to the meeting, while Ukraine is expected to send a delegation to Brussels in the coming days, officials said.

However, analysts say that both sides' reputations have already been tarnished in the row, with the EU increasingly keen to find gas supplies which come from countries other than Russia and pass through countries other than Ukraine. (dpa)

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