Help from Germany: Firms Could Soon Provide Gas to Ukraine

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Under pressure: A gauge is pictured at an underground gas storage facility in the village of Mryn, 120 kilometers north of Kiev in this May 2013 archive photo. Zoom
REUTERS

Under pressure: A gauge is pictured at an underground gas storage facility in the village of Mryn, 120 kilometers north of Kiev in this May 2013 archive photo.

Ukraine's dependence on gas from Russia has often been used as a political weapon by Moscow in conflicts with its neighbor. German companies are now considering how Western European gas could be rerouted to Kiev if the Kremlin decides to cut supplies.

In geopolitical disputes between Moscow and Kiev, natural gas is a frequent tool used by the Russians to bring Ukraine back into political line. With frigid winter temperatures, Ukraine is heavily reliant on Russian gas to provide heating, and in recent years, the Russians have twice cut off gas supplies to the country.

That eventuality could play a role in the current crisis. Now Germany's major energy utility companies are developing strategies to help Ukraine fill the shortfall if Moscow decides to cut gas supplies. Companies including RWE and E.on are working on plans to supply Ukraine with weeks' worth of gas.

Currently, Ukraine taps around half of it gas needs from Russia. But last Friday, Russian Gas monopolist Gazprom threatened to suspend deliveries to Ukraine if the country doesn't pay its outstanding February bill of €1.7 billion ($2.35 billion).

In an emergency, the flow through Europe's pipelines could simply be reversed, with gas getting pumped from German reservoirs through the Czech Republic and Slovakia directly to Ukraine. Following this year's especially mild winter, Germany's reservoirs are much fuller than usual. Even long-term deliveries would be conceivable at the moment.

Ukraine already signed a framework agreement in 2012 with RWE to make the gas deliveries possible. Under the contract, the company has committed itself to delivering up to 10 billion cubic meters of gas per year to Ukraine, which the country was going to use this summer to fill its reservoirs for the coming winter. But RWE executives say they could provide deliveries much sooner.

Graphic: Rethinking Ukraine Gas Deliveries Zoom
DER SPIEGEL

Graphic: Rethinking Ukraine Gas Deliveries

RWE currently draws its gas from Norway or the Netherlands, both major suppliers in Western Europe. It would also be possible to redirect Russian gas from the Nord Stream Baltic Sea pipeline -- which connects Russia and Germany -- through pipelines in the Czech Republic and Slovakia to Ukraine. The Russians have included provisions in their supply contracts with Germany prohibiting such redirection, but a high-ranking energy utility executive told SPIEGEL these clauses are easily circumvented. "Once gas has been delivered to a storage facility, it is impossible to determine where it came from," the source said.

Around 35 percent of natural gas supplies in Germany originate from Russia, but that energy dependence could soon wane as a result of controversial fracking technologies in the United States. The country is currently extracting so much natural gas that it may soon begin exporting it in large volumes.

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1. optional
dlstreifel 03/11/2014
so it wouldn't be a problem for germany if russia turned off their 35% and sent it down to china?
2. optional
spon-facebook-10000061525 03/11/2014
Actually Ukraine has around 5 trillion cubic meters of natural gas reserves, which could be enough for around 100 years at current consumption rates. They also have around 40 billion tones of coal, perhaps the biggest reserves in Europe. If they sign a free trade and investment agreement with the west, they can become independent of Russia
3. german gas to ukraine
drumkeerin 03/11/2014
ukraine has always been lax about paying for gas. gas in the ussr was free, and subsequent governments have not pushed the too hard for payment for political reasons. so, getting the gas there is one issue, but getting the world price is another
4. optional
peskyvera 03/12/2014
And paying for this gas with what? Worthless US dollars?
5. Misleading language
joep.rijntjes 03/13/2014
http://21stcenturywire.com/2014/03/03/how-it-began-natural-gas-is-what-detonated-this-ukraine-crisis/ Gazprom has been a very reliable trading partner (even during the heights of the cold war) and only has repeated spats with Ukraine. http://en.wikipedia.org/wiki/RussiaľUkraine_gas_disputes So go figure. Seems inevitable to conclude that the Ukraine, rife with corruption probably is the problem. Stating in this article "In geopolitical disputes between Moscow and Kiev, natural gas is a frequent tool used by the Russians to bring Ukraine back into political line." is misleading. Germany and other EU countries have been investing serious money in Nordstream just to avoid that quagmire of Ukraine corruption.
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