Europe faces fresh New Year Russian gas crisis

HONG KONG (Reuters) – A fresh New Year energy crisis is brewing in Europe as Russia prepares to foist an indigestible price rise onto Ukraine, putting European supplies at risk, a leading expert on the sector warned on Tuesday.

Jonathan Stern, director of gas research at the Oxford Insitute of Energy Studies, said Russia’s pledge to pay Central Asian gas suppliers “international prices” for gas from Jan.1 meant a huge increase in the price Russia demands from Ukraine.


“Essentially they’re going to try to impose a price on Ukraine that Ukraine can’t pay. And I can see that we’re sleepwalking towards the end of the year and that price has got to be agreed, and I think we could see a replay of 2006,” Stern said. “We could have a major blow-up in January again.”

The European Union gets about a quarter of its gas from Russia, and 80 percent of that is piped across Ukrainian territory. In 2006, a dispute between Ukraine and Russia’s gas monopoly Gazprom led to brief supply cuts to the European Union, sparking a barrage of political complaints.

Reuters