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November 17, 2009

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Home » Business » Energy

EU and Russia agree to 'early warning' setup on energy cuts

THE European Union and Russia yesterday agreed to an "early warning" mechanism to shield Europe from potential energy supply cuts and protect consumers in the event of a repeat of last year's Russia-Ukraine gas dispute.

The agreement requires both sides to notify the other of any likely disruption to supplies of oil, natural gas or electricity and to work together to resolve the problem. Third parties would also be allowed to participate, the European Commission said.

"An energy crisis like the one the EU suffered in January is harmful for supply, transit and consuming countries alike," EU Energy Commissioner Andris Piebalgs said after signing the agreement with Russian Energy Minister Sergei Shmatko.

"We need to do everything necessary to make sure that such a situation never happens again," he said in a statement.

Russian gas supplies to Europe via Ukraine - a route that supplies a fifth of Europe's gas - were halted for more than two weeks in January due to a quarrel between Moscow and Kiev.

Concerns are growing that the dispute could be repeated in January, when Ukraine holds presidential elections. Ukrainian Prime Minister Yulia Tymoshenko said the country had struggled to pay its latest monthly gas bill to Russia.

Russian Prime Minister Vladimir Putin also warned last week that Russia would cut off deliveries should Ukraine siphon off, for its own use, gas crossing its territory en route to Europe.

Russia's Energy Ministry said in a separate statement that the "early warning" mechanism would maintain a clear line of communication between Moscow and Brussels, as well as the means by which to react to unexpected supply disruptions.

"The document contains no sanctions against third parties, but puts forward joint actions to warn of any supply disruptions," Shmatko said.

Vladimir Chizhov, Russia's ambassador to the EU, described the memorandum as "a network of commitments".

"It's not just a red phone connecting Moscow and Brussels," he told reporters on Friday, ahead of the signing. "It's a network of commitments which, of course, includes prompt information of any disruptions to our energy links, be it through technical failures, or natural disasters, or somebody turning off the supply or somebody diverting the energy flow."

Piebalgs, the EU energy commissioner, told reporters at the signing ceremony in Moscow that he hoped there would be no repeat of last year's gas supply disruptions. But he ruled out extending a loan to Ukraine to help Kiev pay for Russian gas.

"We hope ... transit systems won't be closed and there will be no interruption to gas (supplies)," Piebalgs said. "I hope that they (Ukraine) will pay for gas," he said. "The possibility of giving Ukraine a loan is ruled out."

The EU is also studying the possibility of getting other supplies of gas from Central Asia and Azerbaijan, including the Nabucco pipeline route.


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