Thu, Jan 05, 2006 - Page 9 News List

Gas dispute shakes up new EU members

Whether they like it or not, most of central Europe's governments have become dependent on Moscow's energy lifeline


The gas war between Russia and Ukraine has underscored the vulnerability of central European nations as they struggle to secure a place in the EU while remaining dependent on Russia for energy supplies.

Indeed, most of the central European states that signed up to the EU in May 2004 are substantially more dependent on Russia for their gas deliveries than Ukraine.

While Russia covers about 40 percent of Ukraine's gas needs, Lithuania, Latvia, Estonia and Slovakia receive practically all their natural gas supplies from Russia.

About 80 percent of gas supplies for the Czech Republic and Hungary come from Russia, which also meets 62 percent of Slovenia's gas needs. This compares to about 24 percent on average for the EU.

The New Year's Day decision by Russia's state energy giant Gazprom to turn off the tap supplying gas to Ukraine has triggered a new debate in Europe about energy.

However, Austria, which currently holds the EU's rotating presidency, is reliant on Russia for about 60 percent of its gas imports.

As a result, the row between Ukraine and Russia is likely to help move energy up the list of items on Vienna's agenda during the coming six months of its presidency.

Hungary, for one, has called on the EU to help resolve the conflict between Kiev and Gazprom, the world's biggest gas producer.

With signs that Moscow and Kiev might return to the negotiating table, the European Commission on Tuesday called on the two nations to resolve the row.

"The best solution would be when the parties themselves can find a solution to the conflict," commission spokesman Johannes Laitenberger said in Brussels.

But Austrian Economics Minister Martin Bartenstein on Tuesday rejected the notion of the EU taking on a mediating role in the conflict, saying a bilateral solution had to be found.

That said, there have already been calls for European nations to rethink any plans for stepping back from nuclear energy with the conflict between Moscow and Kiev raising worries about the disruption of gas supplies.

This, in turn, has helped contribute to a sharp rise in oil prices on global energy markets.

At the heart of battle between Ukraine and Russia is the move by Moscow to end Soviet-era-subsidized gas prices for Western-oriented Kiev and to increase the price of gas supplies there more than four times.

At the same time, the gas war has also raised concerns in Bulgaria and Romania, which are expected to become the EU's 26th and 27th members within a year.

This was underscored by a report in Bulgaria's Dnewnik daily, saying that Moscow also planned to more than double the price of gas supplied to Sofia. Bulgaria draws 97 percent of its gas supplies from Russia.

Dnewnik reported on Tuesday that as part of energy talks between Moscow and Sofia, Gazprom wants to hike the price from US$120 per 1000m3 to US$260 per 1000m3.

Romania, which receives about 40 percent of its gas supplies from Russia, in November negotiated with Moscow a modest increase in the price of gas deliveries from US$252 to US$285.

Apart from concerns about Russia attempting to use its vast energy supplies as a political weapon, the Gazprom move against Ukraine also serves to highlight Moscow's ambitions to promote itself as a global energy power.

This is particularly the case after it took over the chairmanship of the Group of Eight of leading industrial nations on New Year's Day.

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