Sunday

21st Oct 2018

EU on alert over Russian oil supplies

A fresh row between Russia and Ukraine over energy shipment fees - fast becoming something of a New Year's tradition - has caused alarm in the European Union, as Moscow warned of possible oil supply cuts to central Europe.

On Monday (28 December), Slovakia - 97 percent dependent on Russian oil - held an emergency meeting of its security council, with Prime Minister Robert Fico saying the EU is at risk of disruptions in oil deliveries via the Druzhba oil pipeline from 1 January 2010.

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  • The row is fast becoming something of a New Year's tradition (Photo: Notat)

"We first received information [about the Russian-Ukrainian dispute] during the Christmas holidays," Mr Fico told journalists. He added that the Ukrainian request for higher transit fees was the core of the matter.

The European Commission later confirmed that Russian authorities had triggered an early warning mechanism - a system designed to ring alarm bells before taps are turned off - and gave notice of a possible disruption of crude oil supplies "in the coming days."

"Several member states could be directly affected, notably Hungary, Slovakia and the Czech Republic," reads the commission internal note, seen by EUobserver.

The EU's executive body has re-assured, however, that there is "no current threat to supplies to households or to businesses" as emergency oil stocks in the 27-nation bloc stand at comfortable level of 122 days of consumption.

Hungary, Slovakia and the Czech Republic also report having sufficient reserves - 118, 94 and 101 days, respectively - figures well above the mandatory 90 days.

Speedy solution

Only hours after the announcement by the Slovak government, Moscow and Kiev played down any threat to EU customers by saying they had reached a preliminary deal on oil transit conditions.

"We expect the agreement to be co-ordinated and signed shortly, within one or two days," Irina Yesipova, the Russian energy ministry spokesperson, was cited as saying by RIA Novosti. She added: "New Year's Eve will pass without disruption or unpleasant situations."

Ukraine, for its part, re-iterated that "a reasonable compromise" on transit tariffs has been found, but put the blame on its powerful neighbour and called the Russian warning a "political blackmail."

"Within Ukraine there are no threats, no risks," a presidential aide, Bogdan Sokolovsky, said, according to media reports.

One EU diplomat, involved in the matter and speaking to EUobserver, took a more cautious stance, however. "It would be premature to say that all has been agreed," he said.

No threat to gas flows

It is not the first time that the EU's vulnerability to Russian-Ukrainian payment disputes has been exposed, underlying that significant energy reliance on one supplier is the bloc's Achilles heel.

In January 2007, Russia turned off taps in the same Druzhba pipeline, the world's longest oil pipeline of some 4,000 kilometers, due to a row with Belarus.

Last January, Russian gas stopped flowing through Ukraine for almost two weeks - an event that forced many companies to halt production and left hundreds of homes in the EU without central heating.

Bulgaria and Slovakia were worst hit, with the damage to the Slovak economy amounting to some 0.5 percent of GDP.

Referring to the current situation, the Slovak Prime Minister said there was no sign of a gas supply squeeze in January 2010, but indicated the situation could change in February or March due to half-empty coffers in Kiev.

The International Monetary Fund recently turned down recession-strapped Ukraine's plea for a $2 billion emergency loan due to the country's failure to adopt a fiscally prudent budget.

"Never say never," Mr Fico said, referring to a possible gas crisis. He stressed, however, that Slovakia is better prepared for a possible worst-case scenario.

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