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A Ukrainian worker opens a valve at a city heating and electro-power station
Image: picture-alliance/dpa

European gas shortage

February 7, 2012

From France to Ukraine, Europe continues to freeze under a continental cold spell. Add a Russian gas shortage to the mix and you've got a problem - though one that's being felt differently around the EU.


The European Commission came out Tuesday with a mollifying announcement regarding the flow of Russian gas to western Europe: "There's no crisis," a statement read, adding that Brussels was in "close contact" with member states over their individual supplies.

The Commission gave further reassurance that everything was under control, saying that supplies had returned to normal in a number of EU member states.

However, the tone in one of those member states, Italy, is entirely different at the moment. Officials were said to be holding emergency talks in Rome on Tuesday to ensure that gas supplies could keep homes heated. The death toll from the cold snap in Italy has hit 26, making it the hardest hit among all western European nations.

Cuts to Italian industry

Rome's Economic Development Ministry has announced plans to slash gas supplies to industry and switch from gas-fired plants to coal-fired plants for the time being, moves that were fiercely criticized on Tuesday.

Italy's industrial lobby, Confindustria, said Italian industry was being forced to make unfair sacrifices to cover for Italy's "over-reliance" on gas imports.

"Italian businesses are again seeing their gas supplies cut … The government should tap into its strategic gas reserves and not ask that industry carry the full burden of sacrifices," said Confindustria head Emma Marcegaglia in a statement.

The Colosseum is partly obscured by falling snow
Italy isn't used to snow or extreme coldImage: picture-alliance/dpa

At the moment, however, Italy has far less gas on reserve than its northern EU compatriot, Germany, which is one of the reasons why Germany - despite having its supplies cut by Russia - isn't suffering as much.

"Germany can deal with such shortages without any problems because it has much more gas in storage than Italy," Sebastian Bolay, of the German Chamber of Commerce and Industry, told DW.

What's more, a country located as far south as Italy isn't built to cope with the cold as well as Germany, Bolay said, which means "Italian families are forced to use much more energy to stay warm in these extreme temperatures."

Indeed, Italian demand for gas has reached record heights. Economic Development Minister Corrado Passera said Monday that "consumption was at its highest [rate] ever" and warned that Italians should be "ready for demand being even higher than forecast."

Supply, demand based on weather

Russia's state-owned Gazprom gas supplier rejected calls on Tuesday to make up for last week's shortages by sending extra supplies, with both the company and the Russian government saying Russia had its own gas problem to deal with amid the cold snap.

"During the first week of February demand for Russian gas increased by 50 percent," Gazprom export director Alexander Medvedev told journalists at a news conference in neighboring Lithuania, rejecting calls that Russia was hording its supplies to manipulate gas prices.

Last week, the Kremlin blamed the gas shortage in Europe on Ukraine, saying Kyiv had consumed volumes "well above levels allowed by contract," charges that were immediately rejected by Ukraine's state-owned gas company Naftogaz Ukrainy.

According to Tobias Federico, an energy analyst at the Berlin-based think tank Energy Brainpool, it would be impossible for Russia to manipulate the gas price by simply hording its supplies.

"The price that Gazprom receives for its gas is tied to the global price of oil, so they would have nothing to win by playing around with their supplies. In the final analysis, demand for gas is based on the weather. When it's cold, prices go up," Federico said.

A woman has wrapped herself into her coat and scarf as she walk during snowfall in Skopje
The cold weather is expected to last at least another weekImage: picture-alliance/dpa

Ukraine not to blame

Gas prices in Europe have indeed soared this week, with the UK recording its highest levels since winter 2006 when Russia completely blocked the gas flow to Europe over a pricing dispute with main transit country Ukraine. A similar dispute led to another stoppage - and ensuing price hikes - in 2009.

Amanda Paul, policy analyst at the Brussels-based think tank European Policy Center (EPC), said Russia has used these disruptions in a strategic way, in a bid to promote the use of gas transport routes that circumvent Ukraine.

"This was just another opportunity for Russia to promote the Nordstream pipeline under the Baltic Sea and the South Stream pipeline under the Black Sea. It's just not true that Ukraine's to blame for these shortages in Europe," Paul said.

Though Paul admitted that this latest disruption did evoke painful memories of Russian-Ukrainian gas disputes, she added that the shortages also highlight positives taken from those instances of diplomatic collapse.

"The minimum gas reserves Brussels has required every member state to keep in storage [enough to handle 30 days of consumption] are coming in handy in this extreme cold - and they show Europe has learned an important lesson," said Paul.

But with the cold spell that has left Europe frozen since the end of January forecast to last until at least the middle of the month, countries like Italy look set to deplete most of their supplies, forcing them to look to other sources to meet their domestic needs.

Author: Gabriel Borrud
Editor: Martin Kuebler

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