European Union authorities could intervene to prevent gas shortages this winter in the event the Ukraine crisis causes disruption to flows from Russia, EU stress tests showed on Thursday.
European Energy Commissioner Guenther Oettinger unveiled the results of tests conducted across the EU's 28 member states and 10 neighbouring countries to assess how vulnerable Europe would be in the event of a six-month supply cut from Russia.
"If we work together, show solidarity and implement the recommendations of this report, no household in the EU has to be left out in the cold this winter," Oettinger said.
Should market forces alone not be able to secure supplies, authorities could intervene, the tests concluded.
"A market-based approach should be the guiding principle, with non-market measures (i.e. the release of strategic stocks, forced fuels switching and demand curtailment) only kicking in when the market fails," the European Commission said in a statement.
"Responsibility (for a market intervention) should be shared between public authorities and industry through the implementation of the EU's Security of Gas Regulation," it said.
Russia is Europe's biggest gas supplier, meeting around a third of the region's demand, and the EU gets about half of the Russian gas it uses via Ukraine.
Analysts say that some form of disruption of Russian flows to the EU is likely this winter, either because Ukraine has to siphon off some gas meant for transit en route to Europe in order to meet its own demand, or because Russia reduces its exports to the EU if the crisis with Ukraine deteriorates further.
"As Ukrainian storage only reached a maximum level of 16.7 billion cubic metres and withdrawing should start soon, this will make it difficult to meet local consumption this winter," French bank Societe Generale said in a research note on Thursday.
"Ukraine needs direct Russian gas this winter: the longer it waits, the stronger Russia's position is likely to become. Our base-case scenario calls for a short interruption of gas transit this winter in Ukraine," it said.
Russian President Vladimir Putin warned on Thursday that Russia will cut gas supplies to Europe if Ukraine steals from the transit pipeline to cover its own needs, although he was hopeful it would not come to that.
REUTERS
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