Europe gas cuts still serious, no let up in freeze

Russia reduced gas deliveries to Europe due to extreme weather at home which sent local demand soaring.

The curb is the second in Russian gas exports to Europe in a month and follows a brief cut in early January because of a contract dispute with Ukraine.

The reductions have highlighted the risk of Europe's reliance on Russia which supplies a quarter of its gas.

"The Russia/Ukraine situation sent a shiver down Europe's energy spine. The geopolitics of energy have become very important," Britain's Energy Minister Malcolm Wicks said.

Russian gas giant Gazprom said it was shippping more gas to Europe via the territory of Belarus to compensate for losses in transit gas in Ukraine.

Gazprom blames Ukraine for lower-than-expected deliveries to European customers as it says the state is burning gas above agreed levels.

Complaints about a shortfall in supplies have been mainly heard from countries in southern Europe which gets most of its Russian gas via Ukraine while consumers in northern Europe say Russian supplies have been mostly normal.

Italy, which has suffered a big drop in gas imports from Russia, is preparing a document on the energy crisis to present to the G7 group of industrialised nations and European Union finance ministers (Ecofin).


SUPPLY PICTURE VARIES

The Netherlands continued to export at full tilt on Tuesday, but said it faced demand for extra deliveries from the UK where the weather became much colder at the start of the week.

"Meeting additional demand won't be so easy because the Dutch gas (export) grid is already running at full capacity," said a spokesman for gas grid Gasunie Trade and Supply.

Gas importers have been scrambling to find alternative ways of powering industry. Some industrial users with the capability to do so have been switching from gas to fuel oil.

The supply picture varied on Tuesday with Hungary reporting an increase in Russian imports while Italy said the gap between supply and demand worsened with Russia deliveries expected to be eight percent below consumption.

Italy's oil and gas firm Eni said it had bought two liquefied natural gas cargoes to help offset the shortages of gas supplies from Russia.

Eni CEO Paolo Scaroni said tackling the natural gas crunch had so far cost the company 40 million euros ($49 million).

Deliveries to Croatia fell seven percent overnight. In Romania, households have suffered cuts in their gas supplies after demand surged and the country's main power producer has been asked to switch to oil and coal to save gas.

"Gas supplies through the Isaccea (transit point) are 14-15 percent lower than the quantity stipulated in the contract," gas agency DNGN director Marius Stroia told Reuters.

"Household consumers have started to be affected in the north-east (of the country) and in Bucharest," he said.

Romania's Economy Minister Codrut Seres said he had sent letters to the Russian economy minister and to Gazprom's export arm Gazexport urging the company to stick to the terms of the contract."

Source: reuters