EU faces deepening energy crunch over Russian gas
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Gemina [2011-05-20]
MOSOW/KIEV - Russian gas supplies to Austria, Slovakia and the Czech Republic were halted on Wednesday, adding to the list of EU states left without Russian fuel in freezing mid-winter temperatures.
Moscow and Kiev showing little sign of a swift resolution of a pricing dispute that has slashed Russian gas supplies to the West and, in some countries, forced authorities to take emergency measures to eke out dwindling fuel reserves.
In Kiev, Ukrainian state energy firm Naftogaz said gas had stopped flowing through the last compressor station still functioning, on Ukraine's Western border.
Czech importer RWE Transgas said the main transit pipeline from Russia to the Czech Republic and Western Europe was halted from midnight.
Austria's OMV energy group, which earlier reported a dramatic fall in Russian supplies, said flows had now stopped completely. Slovakia also said its supplies were halted.
Europe's heavy dependence on Russian energy -- and its vulnerability to supply disruption -- was highlighted when Moscow reduced volumes to Ukraine on New Year's Day after failing to reach agreement with Kiev over debts and gas prices.
With gas stockpiles in Europe falling with each day the disruption continued, and sub-zero temperatures driving up demand, there was no sign Moscow and Kiev were closer to resolving their row over pricing and transit fees.
Both sides traded blame. Russia has accused its former Soviet neighbor of stealing about 15 percent of the gas it ships across Ukraine to European states.
"Ukraine has stolen gas not from Russia, but from consumers who have bought the product and paid for it," Prime Minister Vladimir Putin said in televised remarks late on Tuesday, ahead of Orthodox Christmas celebrations on Wednesday.
Ukraine's pro-West President Viktor Yushchenko blamed Moscow for the supply disruptions, saying Moscow would continue to close the gas taps to Europe or stop them altogether.
"CRISIS SITUATION"
So far Eastern and central Europe have borne the brunt of the row, Bulgaria talking of "a crisis situation" and cutting or suspending supplies to industrial users. Two fertilizer companies had to halt production.
France and Italy also reported a steep drop in supplies but the euro zone's major economies have so far escaped any economic repercussions.
Nevertheless, German energy provider E.ON Ruhrgas said drastic cuts and a prolonged cold spell could cause shortages. High energy users like aluminum, glass and metals makers could be hurt by a lengthy crisis.
The escalating price dispute and cold snap drove the British gas market, Europe's biggest and most liquid, to its highest level since October. By late trade, day-ahead baseload gas was 12.76 percent higher.
The European Union gets a quarter of its gas from Russia, 80 percent of it via Ukraine, and officials from the bloc's current president, the Czech Republic, met both sides on Tuesday to urge an early resumption of talks.