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22 September 2014

RUSSIA’S TENSIONS WITH UKRAINE COULD AFFECT ENERGY IN BALKANS – ANALYSIS

By Ivana Jovanovic


The recent decision by Russia to cut gas exports to Poland reignited concerns about gas supply and prices in southeastern Europe, as well as about tension between Moscow and the West.

According to Polish state energy group PGNIG, gas volumes have been slashed by up to 24 percent. The country has been exporting gas to Ukraine to make up for Russian shortfalls there.

Ukraine depends on these “reverse flows” to supply homes and businesses with gas since it is cut off from Russian supplies.

Experts in the region expect negative consequences from the Russian decision.

According to Romania Energy Minister Razvan Nicolescu, Russia will cut gas supplies to Romania by 10 percent.

“We are talking about absolutely insignificant quantities. I don’t think there will be any risk for the country’s and population’s supplies, not even if the supplies are entirely cut and resumed in spring,” he said Monday (September 15th) after the announcement.

Although Romanian officials say the country has enough gas reserves to avoid a short-term problem, analysts say these measures do not suffice and this should launch a wake-up call.

“We need to find long-term solutions and not confine to mere short-term answers. There is a risk this crisis between Russia and Ukraine will last longer than we expect and then new response measures will take longer to implement,” Otilia Nutu, an energy specialist with the Expert Forum think tank, told SETimes.

Jelena Milic, director at the Belgrade-based Centre for Euro-Atlantic Studies, said the halt of gas supplies to Ukraine by Russia is going to aggravate the supply and increase prices for Serbia.

“But, this could be good for a few reasons: finally Serbia will become committed to diversification and become a serious member of the Southeast European Energy Community because it has contractual obligations,” Milic told SETimes.

Milic warned that the worst thing that could happen is a privatisation of the electric power industry of Serbia by the Russians.

“In this way, we’ll become totally energy dependent on Russia and can say goodbye to EU integration, because Russia’s goal is to destabilise and divide Serbia from the EU by controlling the energy sector,” she added.

Yavor Siderov, current affairs analyst and former teacher at American University in Bulgaria, said energy racketeering is a wholly unacceptable tool, especially for individual EU member states and prospective members.

“Previously cutting off supplies in the middle of winter and blaming the cut on Ukraine exposed the EU to its perilous dependence on Russian gas and simultaneously revealed its rather limited retaliation options. Russia was quick to realise however that antagonising its most important customers in Western Europe was not a good idea and during the current crisis repeatedly stated that the flow would not be interrupted,” Siderov told SETimes.

He said Russia sees the Balkans as an important part of its long-term political and economic strategy for countering the EU and NATO presence in what it views as its traditional sphere of influence.

According to Siderov a possible solution is energy efficiency.

“Less efficient economies waste a lot of power and this needs to be addressed. Investing in energy efficiency will in the long run reduce dependence on Russian sources by reducing the overall need for carbohydrates and nuclear power,” Siderov said.

He added that there is a pressing need for a common European energy policy, as well.

“A good starting point, and one that is being addressed at the moment, is the need for a centralised body to negotiate gas prices with Russia. This need not be perceived as a hostile move against Moscow. It is only logical that an area of such critical importance as energy requires some form of co-operation,” Siderov said.

Correspondent Paul Ciocoiu in Bucharest contributed to this report.

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