Will Slovakia's gas supplies be disrupted again?
December 30, 2009
It is so, so difficult to know whether Europe will suffer another winter of gas and oil disrutions through Ukraine. Throughout December there have been conflicting reports on Ukraine's ability to pay its bills to Russia and noises from Russia that if Ukraine couldn't pay then the terms of the contract would be enforced.The IMF turned down Ukraine's recent tranhe of a loan of nearly $4Bn and coupled with reports from Gazprom that Ukraine has cut back its purchases of gas supplies the analysis is that Ukraine has a cash flow problem which will lead to it defaulting on its January payments. These reports come very shortly after Russia and Ukraine had top level meetings the outcomes of which were smiles all round and statements that there would not be a repeat of last year's gas crisis.
One fifth of Europe's gas supplies come from Russia through the Ukraine – but this statistic hides the reality for several individual countries which are highly, if not wholly, dependent on Russian gas. Oil supplies from Russia to the EU also transit Ukraine but these are thought to be less likely to be disrupted.
Lithuania has a different problem. Thanks to a clause in the agreement to join the EU, Lithuania must close its Ignalina nuclear power station on December 31st. The power station supplies 70% of Lithuania's electricity which will have to come from somewhere else, such as Russia, either directly or in the form of oil to burn in power stations. Replacing 70% of a country's electricity supply is not easy and is certainly not cheap; Lithuanians are going to have to find a lot of money to pay their fuel
Surely voters in Europe must demand that their leaders get a grip on the energy supply situation and reduce the dependency on Russia?
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