The European Union is preparing a contingency plan in case Russia blocks gas supplies in retaliation for the new sanctions linked to the Ukrainian crisis. Brussels could ban gas exports and limit its industrial use to protect household energy supplies next winter. This was stated by a source quoted by the Reuters agency.
Kiev has warned that Russia intends to cut off gas supplies, while Moscow says Ukraine could divert energy destined for the EU, which itself has just threatened new sanctions if Vladimir Putin does not withdraw its military from Ukraine.
Oil and coal buyers can find new suppliers relatively quickly, but southeastern Europe gets most of its gas from Gazprom. Qatar and Algeria carry liquefied natural gas (LNG) to Europe via Atlantic and Mediterranean ports, but European buyers often resell those cargoes abroad rather than supplying the domestic market. A source from the European Commission explains that Brussels is considering a ban on the practice of reselling gas to strengthen reserves.
“In the short term we are very worried about the winter – says the source, who has direct knowledge of the Commission's emergency plans -. Our best hope, in case of a cut, is the emergency measure 994/2010, which could prevent LNG from leaving Europe, as well as limit the use of industrial gas in order to protect families”. European Energy Commissioner Guenther Oettinger said last week during negotiations with Ukraine and Russia that the bloc was preparing a 'Plan B' to protect gas supplies in the worst-case scenario.
A reduction in industrial consumption could hurt an already shaky European economy, while a ban on LNG sales outside the EU would hit utilities, which are preparing for a supply cut, stockpiling as much gas as possible. Meanwhile, gas prices have risen 35% since July.
