Europe Wants 'One Gas Price for All' from Russia

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - The European Union (E.U.) has called on Russia to offer a single price for Russian gas for all of its Member States as well as for Ukraine, Georgia and the western Balkans.

The call was made by E.U. Energy Commissioner, Günther Oettinger, after a meeting with Poland's Prime Minister Donald Tusk, who is championing an E.U energy union that would jointly purchase Russian gas.

"We want a uniform gas price in the European common market," Oettinger told reporters. "The game of 'divide et impera' [divide and rule], or a game of this type proposed by Moscow cannot be and will not be accepted by E.U. member states. We have very big differences in terms of gas prices. The higher the share of Russian gas in purchases and the bigger monopoly Russia has in supplies, the higher the prices are."

Oettinger also wants to improve pan-European gas and electricity grid links. He said: "The infrastructure with regard to gas and energy transit should have a pan-European character and should also include Ukraine, Georgia and Western Balkans. We want to prove our solidarity with Ukraine."

As it stands, Russia charges different countries different prices for gas. The E.U. wants to use common pricing to boost energy security and lower the cost of gas. High gas prices have contributed to many energy companies shutting newer and more efficient gas-fired power plants in favour of burning cheaper coal in older coal-fired plants which emit more CO2. The current crisis between Russia and Ukraine over the annexed Crimea region also poses a threat to European gas supplies. One third of Europe's gas is supplied by Russia and half of that comes through Ukraine.

Last week, meetings between the European Commission (E.C.), Russia and Ukraine in Warsaw failed to solve the gas issue. Instead Russia threatened to cut natural gas supplies to Ukraine unless the country pre-pays for June's gas delivery by the end of this month. Historical clashes over unpaid debts have led to severe gas shortages in Europe, most notably in 2009.

"If we don't receive pre-payment for June by 31 May, then it is possible Gazprom will reduce gas supplies to Ukraine or provide it with the capacity it has paid for by 31 May," Russia's Energy Minister Alexander Novak told media. He also claimed that Ukraine might not be able to store enough gas during the summer to supply Europe throughout the coming winter.

Russia's state-owned natural gas company Gazprom (PINK:OGZPY) (Moscow) claimed that Ukraine already owes it around €2.5 billion ($3.5 billion) for gas already delivered.

In April, Gazprom cancelled its discount on gas prices for Ukraine, which had been granted in December 2013 by Russian President Vladimir Putin. The company claimed the decision was because Ukraine had failed to pay its gas debts and had nothing to do with ongoing tensions in Ukraine where Russian forces have since annexed the Crimea region. For additional information, see April 3, 2014, article - Russia's Gazprom Eliminates Discount to Ukraine, Increases Gas Prices 29.1%.

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