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EU Commission worried about Ukraine gas supply, not Europe's

Source: Reuters - Tue, 4 Mar 2014 16:54 GMT
Author: Reuters
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* EU ministers debated Ukraine energy situation on Tuesday

* Further talks expected at meeting of EU leaders on Thursday

* Oettinger to meet new Ukraine energy minister (Adds detail, context, quotes)

By Barbara Lewis

BRUSSELS, March 4 (Reuters) - European Union policymakers are concerned about the risk of gas shortages in Ukraine, but there is no immediate threat to supplies in Europe, where stocks are high after a mild winter, Energy Commissioner Guenther Oettinger said on Tuesday.

Ukraine has strategic importance as a major gas transit nation for supplies from Russia to the European Union, which relies on Russia for about a quarter of its gas.

EU energy ministers meeting in Brussels on Tuesday held talks on the energy consequences of turmoil in Ukraine.

The discussion is expected to continue as part of wider debate on the crisis at an emergency meeting of EU leaders on Thursday.

"We are not concerned about short-term security of supply," Oettinger told a news conference. "But we are concerned about security of supply in Ukraine."

"We feel that Ukraine should stay as a single market. If Ukraine splits up, this is going to be a disadvantage for the market," he said.

President Vladimir Putin denied that Russian troops had seized Ukraine's southern Crimea region, where armed men, with no insignia but bearing all the marks of their Russian origins, have taken control of all official buildings and some army bases.

At the same time, Russia's gas export giant Gazprom has said it will remove a discount on the price it charges Ukraine for gas from April.

That increases the risk that Ukraine, which says it needs $35 billion over the next two years to stave off bankruptcy, will not be able to pay its gas bill.

The European Union is in talks with international financial institutions on financial help for Ukraine and Oettinger reiterated on Tuesday that the aid could cover gas, including co-financing a modernisation of the gas system.

Oettinger also said he would meet Ukraine's newly appointed Energy Minister Yuri Prodan in Brussels on March 19, a day before a scheduled meeting of EU leaders.

Following previous gas supply crises involving price disputes with Ukraine, the EU has increased requirements for member states to hold storage, it has improved infrastructure and it has sought to diversify supply.

Some EU ministers on Tuesday said the Ukraine situation underlined more than ever the need for Europe to develop its own energy in the form of renewable sources and possibly shale gas.

EU diplomats, speaking on condition of anonymity, said Tuesday's discussions also raised concerns about the cost implications of the Ukraine crisis, which could stoke gas prices and potentially increase the need for liquefied natural gas. (Additional reporting by Tom Koerkemeier,; Writing by Henning Gloystein; Editing by Dale Hudson and David Evans)

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