Russian experts scoff at EU’s latest gas tactics[fr] 

After a meeting of the EU’s Gas Coordination Group on 2 July, the Commission recommended member states to better prepare for the coming winter period and to fill their gas storage capacity from all possible available sources. 

The Russian daily Vremya Novostey mocked this decision, calling it “another testimony of the helplessness of the European bureaucrats”. 

Editorialist Alexei Grivach argues that filling up gas storage capacity in Western Europe while Eastern European and Balkan countries are still suffering supply deficits and lack alternative supply routes, would in no way alleviate the situation of the most vulnerable countries. 

“Bulgaria, Slovakia and Greece, and also non-EU members from the former Yugoslavia, remain the most helpless in the face of predictable difficulties of gas transit trough Ukraine. And the attempts by Sofia to upgrade its gas storage for increasing its capacity, the signing of a contract between the Slovak company SPP with Germany’s E.ON Ruhrgas for the supply of 500 million cubic meters of gas per year, and the efforts by Athens to develop LNG imports will not remedy this,” the author writes. 

Vremya Novostey derided the Commission’s calls for pumping gas into storages, as is says European companies have been doing precisely that over the last three months, without any need for Brussels’ advice. 

The logic, the paper says, is rather economic: Gazprom gas prices were high at the beginning of the year, reaching $430-470 per thousand cubic meters, and during this period EU countries preferred using gas from their storages capacity, built up over the previous summer. But prices fell in the second quarter, to the level of $230-250 from 1 July, and the companies have now started filling up their storage tanks again. 

High political cost of Russia-Ukraine dispute 

Other experts, however, voiced concern that Russia was paying a high political price for its successive payment disputes with Ukraine. 

Bulat Nigmatulin, deputy director at the Russian institute for problems of natural monopolies (http://ipem.ru/ ), deplored the conflict. “As long as we will be in conflict with Ukraine, the EU will be losing confidence in us, and our sales will drop,” he argues. 

Konstantin Simonov, head of the Russian fund for national energy security, warned that Russia’s EU gas market share was not as large as many think. “It used to be 25% in the previous year, and in the first quarter of this year it felt to 16%,” he stated, confirming the bad forecasts for Russian sales (EurActiv 25/06/09). 

Simonov argued that the best way for Russia to maximise its revenue from sales to Europe is to sell to final users. He deplored that so far only Germany has allowed such access to Gazprom. 

“In Europe, there are some people - I call them ‘the liberal Talibans’ - who think that the road to prosperity is the liberalisation of all markets. But these ‘fundamentalists’ can in fact help us, because the bottom line is, that every gas seller should be able to sign contracts with the final user,” Simonov argues. 

Gennady Ryabtsev, a Ukrainian expert quoted by the Ukrainian daily Kommersant, said that the Commission’s call to EU countries to fill in their gas storages decreases the chances of Kiev to secure loans from European financial institutions. 

“I doubt the European Commission will be actively involved in finding the funds Ukraine needs. It would rather be something to be handled between the European banks and [Ukraine’s] Naftogaz,” Ryabtsev said. 

Russia's economy today is much more dependent on oil and gas sales than it was in 1998, Katinka Barysh, deputy director of the Centre for European Reform in a new policy paper called “Russia: A tale of two crises”. In 1998, oil and gas sales accounted for 44 per cent of export revenue, now the share is over two-thirds. Many manufacturing and services industries are directly or indirectly linked to the resource sector,” the author writes.