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Bulgaria - Energy & Utilities

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Balkans better prepared for gas crisis this winter

Michael Kahn and Anna Mudeva - 19.11.2009

Central and southeastern European countries are better prepared for a potential gas cut-off this winter but have made little progress in weaning themselves off Russian supplies.

Last winter a contract dispute between Kiev and Moscow spurred the Russians to shut down a pipeline serving the region, leaving thousands without heat and forcing businesses to close.

Caught unawares, regional officials were unable to quickly pipe gas from other parts of Europe, while many storage facilities were filled below capacity. The problem was worsened by the lack of pipelines between neighboring countries and the inability to reverse gas flows.

A repeat this winter would still hurt, but countries have taken cautionary measures, including increasing gas stocks and arranging reverse gas flows from other parts of Europe.

"They will get hit again but maybe not to the extent they were hit last time," said Andrew Morris, director at London-based energy consultant Poyry.

"Last year it took quite a long time to arrange for reverse flows and getting supplies from LNG cargoes. All these things weren't normal and had to be contractually set up."

Bulgaria is better prepared this year but will rely mostly on Brussels' interference and diplomacy to prevent another crisis, Prime Minister Boiko Borisov said.

The Balkan country has placed more gas in storage, arranged possible reverse flows from Greece and Turkey, and required utilities to secure alternative fuels.

Serbia has taken steps to fill a storage facility in Banatski Dvor and has rented another in Hungary, though some officials question whether this is enough.

"Serbia is definitely better prepared than it was last year," said Ian Brown of the power and energy department at the European Bank for Reconstruction and Development.

"But the key question is how much gas they will be able to draw per day."

Gas stocks in most parts of western Europe are slightly higher than a year ago. Britain and Italy have opened new LNG terminals this year, which could boost supplies for countries with pipeline connections to them.

The political and technical response to any shutdown will also be quicker this time.

"The unexpectedness of the shutdown and the lack of preparation meant it took almost as long as the gas crisis itself to adjust politically and technically to different supply routes," said Michael LaBelle, an analyst at the Regional Centre for Energy Policy Research at the University of Budapest.

"You should see an active response by governments and companies within 24-48 hours of any supply disruption."

Still, Balkan countries have achieved little progress in reducing their near total dependence on Russian gas in the medium to long-term.

The European Union agreed to partially fund construction of lines between southeast European members, but Bulgaria, Greece and Romania have not announced a timetable nor secured the extra funding.

Source: Reuters, Balkans.com Business News

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