Tuesday

26th Oct 2021

Cold War politics haunt EU gas crunch response

  • The cold snap in Europe will see gas demand shoot up (Photo: EUobserver)

Ex-Communist EU states are again accusing Russia of using energy as a political weapon in the Ukraine gas crisis, despite European Commission efforts to paint the dispute as a purely commercial matter.

"It's big politics from 2004 [when Ukraine broke away from Russia's control in the Orange Revolution]," a senior Lithuanian official told EUobserver on Monday (5 January).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"Russia is saying: 'You have to become a vassal state, then you get what you want.' All the neighbouring states of Russia are still fighting for their independence," he added. "Lithuania is paying one of the highest prices for gas in Europe and this is also as a result of Russian attitudes to our policies."

Russia cut Ukraine's gas on 1 January after accusing Kiev of not paying its 2008 bill and asking it to pay $450 (€330) per thousand cubic metres of gas in 2009, compared to $180 in 2008 and compared to average European prices of $450 to $500.

The Paris-based International Energy Association (IEA) has questioned the commercial logic of the move.

"To adjust prices so rapidly will cause problems for Ukrainian consumers," IEA expert Ian Cronshaw told this website. "Russia's call for higher prices is interesting because it reflects the abnormally high oil prices at the beginning of 2008. Those prices are dropping and should keep falling in 2009."

EU deputy ambassadors met in Brussels on Monday to exchange technical information about gas supply shortfalls. Ukraine transit of Russian gas accounts for one fifth (about 300 million cubic metres) of EU daily consumption.

But the first political-level debate will take place at an informal gathering of EU foreign ministers in Prague on Thursday, with some EU officials expecting a renewed push for the Nabucco pipeline project, designed to bring in gas from Central Asia to the EU, bypassing both Russia and Ukraine.

Russia-Ukraine rows over gas prices have taken place every winter since the Orange Revolution, with the worst spat in 2006 seeing Ukraine transit shipments to the EU plunge by 200 million cubic metres a day, compared to the current shortfall of around 50 million cubic metres.

The 2006 crisis was widely interpreted as a Russian attempt to destabilise the post-revolutionary government in Ukraine.

But the European Commission is depicting the latest crunch as a purely commercial dispute between Russian supply firm Gazprom and Ukraine's state-owned gas buyer, Naftogas.

RosUkrEnergo - an intermediary company co-owned by Gazprom and Ukraine oligarch Dmitry Firtash, which buys gas from Gazprom and sells it on to Naftogas - has reportedly filed a law suit against Naftogas at an arbitration court in Stockholm to get its 2008 money.

"It is a commercial dispute and it has to be solved by the two parties," European Commission spokesman Ferran Tarradelas said on Monday, adding that the commission's main concern is EU consumers, which have not yet been affected by the spat.

A delegation of commission and Czech EU presidency officials is due in Kiev on Monday and Tuesday on a "fact-finding" mission to see how bad things might get, with another set of EU officials to meet Gazprom delegates in Berlin.

Some EU officials believe a Russia-Ukraine deal will be struck by Wednesday, in time for Russian officials to settle down for the Russian Orthodox Christmas holiday.

But the IEA in Paris is less optimistic, pointing out that while EU gas stocks (at 70 to 90 percent full) are higher than back in 2006, this week's cold snap in Europe will see gas demand shoot up.

"The bad news is the weather has turned. There's a nice little snowfall in Paris today," the IEA's Mr Cronshaw said.

"There doesn't seem to be a lot of momentum to resolve the issue. We're getting a little worried it's dragging on for a week already, whereas in 2006 it lasted just a few days."

Correction: the article originally said an informal EU foreign ministers meeting will be held in Prague on Wednesday. In fact it will be on Thursday

Luxembourg tax scandal may prompt EU action

An investigation into Luxembourg's tax regime has uncovered how the Italian mafia, the Russian underworld, and billionaires attempt to stash away their wealth. The European Commission has put itself on standby amid suggestions changes to EU law may be needed.

Investigation

Portugal vs Germany clash on EU corporate tax avoidance

Portugal's taking over the EU presidency puts the tax transparency law for corporations - which has been fought over for years - to a vote in the Council of Ministers. The resistance of the German government has failed.

News in Brief

  1. Timmermans cancels Moscow visit ahead of COP26
  2. Report: EU to open new mission in Kabul
  3. Bulgaria and Romania run out of beds for Covid-patients
  4. Afghanistan 'on brink of collapse', Sweden warns
  5. Far-right vigilantes stopped on Polish-German border
  6. Croatian right-wingers seek euro referendum
  7. Orbán accuses EU and US of election meddling
  8. Militants free international observers in Russia-occupied Ukraine

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew report reveals bad environmental habits
  2. Nordic Council of MinistersImproving the integration of young refugees
  3. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  4. Nordic Council of MinistersCan you love whoever you want in care homes?
  5. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  6. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals

Latest News

  1. Erdoğan orders out US and EU ambassadors
  2. EU banks play 'major role' in deforestation, report finds
  3. NGOs reveal 71 'revolving-door' cases at fossil-fuel giants
  4. Energy and gender in EU focus This WEEK
  5. Nato invite sees Nordic states stepping up security cooperation
  6. Lessons for the EU in Sahel, from Afghanistan
  7. EU states want more Belarus sanctions
  8. Gas price spike exposes rift at EU summit

Join EUobserver

Support quality EU news

Join us