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Europe uses up gas reserves as Russia closes the taps

Business Materials 7 January 2009 16:04 (UTC +04:00)

Europe tapped into its gas reserves and began taking emergency steps Wednesday after Russia cut all supplies to the continent via Ukraine amid an escalating dispute between Moscow and Kiev, reported dpa.

Hungary, Italy, Austria, Slovakia, Greece, Turkey and most of the Balkan nations were among the hardest hit by the drop in Russian gas, which has coincided with one of the coldest winters in decades, heightening fears of possible shortages over the coming days or weeks.

Overnight temperatures dropped to minus 6 degrees Celsius in Madrid, minus 11 in Sofia and minus 26 near Berlin. In northern Italy, heavy snowfalls and rainstorms disrupted air and road transport and delayed the opening of many schools after the Christmas holiday break.

In snowy Brussels, the European Union again demanded that Russia and Ukraine immediately re-open full gas supplies to the bloc and solve their dispute urgently.

The statement followed telephone conversations in which European Commission President Jose Manuel Barroso told Russian Prime Minister Vladimir Putin and Ukrainian Prime Minister Yulia Tymoshenko that it was "unacceptable" for them to hold the EU's gas security hostage.

The EU executive said it was now considering sending observers to monitor Russian gas flows through the Ukraine as a way of helping resolve the standoff.

Hungary, meanwhile, became one of the first European countries to impose restrictions on industrial gas use as underground reserves were being tapped at maximum capacity.

However, the Hungarian government said it had enough reserves to last a further 50 days, putting the country in a more comfortable position than many of its regional peers.

In nearby Serbia, for instance, officials warned that reserves were down to just half a million cubic metres, while Bulgaria, which is 100 per cent dependant on Russian gas, was considering re-opening one of its Soviet-era nuclear reactors - shut down for safety reasons when it joined the EU - in order to meet its energy needs.

Emergency measures were also triggered in Slovakia, while Poland, which normally gets 15 per cent of its gas from Russia via Ukraine, was compensating for the drop by boosting supplies via neighbouring Belarus.

Italy, which relies on Russia for almost a third of its gas imports, on Wednesday also confirmed that it had received none of its allotted daily supply.

But Economic Development Minister Claudio Scajola said the current cuts did not represent "specific concerns," noting that the country had enough reserves to last until February.

Italy, like other European countries, has sought to expand and diversify its energy imports, clinching accords with Algeria, Libya, the Netherlands, Norway and Britain, after being badly affected by the previous Russian-Ukraine gas standoff of 2006.

Speaking in Berlin, the deputy chief of Russian state-owned gas giant Gazprom, Alexander Medvedev, warned about possible "serious damage" to Europe's natural gas pipelines as a result of ice cold temperatures in Central and Eastern Europe.

Medvedev said Gazprom was being held hostage by the Ukraine government and called on Kiev to allow his company to renew gas deliveries to Europe.

The Ukrainian government has in turn denied siphoning off any gas destined to Europe and has urged Gazprom to end its gas embargo on Ukraine amid a war of words over unpaid bills and Russian demands for higher prices.

The Czech presidency of the EU has said it wants to organize a top level meeting of EU representatives with Gazprom and Ukraine's natural gas monopolist, Naftogaz.

Such a meeting could take place on Friday in Brussels, when the EU's gas coordination group is due to meet to assess the impact of the crisis.

Meanwhile, EU Energy Commissioner Andris Piebalgs was due to meet Gazprom CEO Alexei Miller on Thursday.

Russia supplies about a quarter of the EU's natural gas needs, with about 80 per cent of deliveries flowing through Ukrainian pipelines.

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