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Gas and Fears

Experts say the ongoing Ukraine crisis demands “closer monitoring” of European gas supplies via Ukraine. A leading British academic says a “significant” level of co-operation in the Danube region will have a “positive effect” on alleviating current concerns about the security of gas supplies to Europe.

The issue is back on the political agenda because the Ukraine conflict has fueld growing fears about the security of Europe´s energy supplies from Russia this winter.

Alan Riley, Professor of Law at City University, London, also said such cooperation would provide EU policy makers with “new evidence” for “rethinking” its approach to delivering both climate change objectives and affordable energy for consumers.

Prof Riley suggested the possibility of a “natural gas deal” for Europe which, he believes, would ensure security of supply this winter and lower gas prices for all member states.

The academic was speaking in Budapest at a conference on the “Development and Use of Natural Gas in the Danube Region: Prospects and Opportunities”, hosted by the Hungarian Chamber of Commerce and Industry with support by the Danube Energy Initiative.

Prof Riley was invited by the Danube Energy Initiative and spoke in a presentation on “Other energy sources – What are the Options for the Region.”

Prof Riley says that notwithstanding current political conflicts there is also a more “significant” role the energy initiative could have in promoting an energy bargain between the EU and Russia.

“The EU is suffering from high energy prices and a lot of competitiveness due to the US shale revolution. The EU will no doubt produce some shale gas over time. However, on its doorstep the EU has the world’s largest gas resources on the territory of the Russian Federation.”

He says that, potentially, as part of any political settlement between the EU and Russia, there is “mutually beneficial” deal to be done in which Russia provides significantly more gas to Europe, and Europe adopts pro-gas policies on the basis set out above, an over-arching C02 reduction target, which is technology neutral.

“In essence Russia benefits by selling much more gas, but at lower prices and Europe gains the benefit of the lower prices allowing it to compete with the US, as well as allowing it to more radically cut C02 emissions.”

As the Ukraine crisis continues to impact on relations between Europe and Russia, another keynote speaker, Jan Zaplatilek, Director of the Gas and Liquid Fuels Department at the Czech Ministry of Industry and Trade, raised “serious concerns” about the potential for an interruption to gas supplies over the coming winter.

Zaplatilek referred to the gas crisis of 2009 and proposed that working groups of member states be formed to monitor the delivery of gas through Ukrainian pipelines in an effort to ensure continued flow.

Expanding on the idea,Zaplatilek said, “During the gas crisis of 2009, European countries dependent on Russian gas formed a monitoring group to monitor the supply of gas. Given the current crisis, we need to see this initiative resurrected again, this time proactively.

“The Czech Republic relies on Ukrainian transport routes for 60 – 65 % of its gas, so we will be looking to partner with other European countries on this idea, before any potential crisis emerges.”

It was an idea endorsed by Aleksander Antic, the Serbian energy minister, who said, “The situation in the Ukraine is deeply worrying from an energy security perspective as we head into winter. We need to pre-empt any scenario where we face gas shortages. The proposal that consumer countries take a role in monitoring supplies coming through the Ukraine is an interesting one and we will take a serious look at how we can be of assistance.”

The proposal was backed by other speakers, including Yavor Kuiumdjiev, a member of the Bulgarian Socialist Party and a former deputy chairman of the Energy Commission of the Bulgarian Parliament.

Other participants included Aleksandar Antic, Minister of Energy of Serbia, Anton Pavlov, Deputy Minister of Economy and Energy of the Republic of Bulgaria as well as by Marton Balint Sipos, Head of International Department at the Hungarian Ministry of National Development.

Various speakers acknowledged the “growing need” for international cooperation in the Danube region and agreed that finding a solution to energy security in the Danube region and in Europe generally requires a “permanent dialogue, greater mutual understanding and new ideas.”

All said that Russia is the most important commercial energy partner for Europe and has always been a reliable provider of gas for many European countries, with Gazprom supplying over a quarter of the European market.

Laszlo Parragh, hosting the conference, emphasised the importance of such events saying, “The Hungarian Chamber of Commerce and Industry is immensely proud to have hosted this conference. Greater regional cooperation is the key to lowering prices for consumers and ensuring that we have a secure energy supply. It is vital that senior leaders from across the region continue to come together to discuss these issues. The Danube Energy Initiative can be used for a platform for the discussion of such issues.”

The conference, he said, was an important milestone in realising the need for closer cooperation between political, social and business communities in achieving secure energy supply and in establishing Danube Energy Initiative as credible “thought leader” on energy policy to help coordinate a broad range of energy policies.