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UPDATE 1-EU should stress test vulnerability to Ukraine gas cut -draft
May 20, 2014 / 5:02 PM / 4 years ago

UPDATE 1-EU should stress test vulnerability to Ukraine gas cut -draft

* Some nations 100 percent dependent on Russian gas

* Commission also suggests ‘common capacity reserve’

* EU member states to debate energy security at June summit (Adds detail)

By Barbara Lewis

BRUSSELS, May 20 (Reuters) - EU nations should conduct stress tests before winter to work out how vulnerable they would be in the event the crisis over Ukraine leads to a major disruption of natural gas supplies from Russia, a European Commission draft document seen by Reuters shows.

EU leaders early this year called on the Commission, the EU executive, to draw up a list of measures for the short and longer term to improve the bloc’s energy security after Russia’s annexation of Ukraine’s Crimea region.

Ukraine is the transit route for roughly half of the gas the European Union imports from Russia.

Concerns about possible supply disruption are high because Kiev has been refusing to pay the gas price Moscow is demanding, but the real risk is for next winter when storage levels are likely to be less full and demand much higher.

Before next winter, the Commission calls on member states to perform a stress test of the EU energy system and to develop back-up mechanisms such as increasing gas stocks and finding short-term ways to cut demand.

It also wants other major supplier countries to increase energy production, where possible, and global gas resources, such as liquefied natural gas, to be redirected to Europe.

Germany is Europe’s biggest buyer of Russian gas in terms of volume, while six eastern nations are 100 percent dependent on Russia for their gas.

ONGOING PROCESS

Following previous gas supply crises sparked by pricing disputes between Ukraine and Russia, the European Union has taken precautions such as holding 30 days’ gas demand in storage.

The Commission is assessing whether this requirement should be increased.

The draft document raised the idea of pooling some stocks into “a virtual common capacity reserve”, possibly in cooperation with the Paris-based International Energy Agency, for rapid response in the case of disruption.

For the longer term, the Commission has outlined its vision for energy and environment policy for 2030, which would include improved energy efficiency and a bigger share of renewable energy in the mix.

It is also accelerating efforts to complete its single energy market, based on better cross-border connections between member states.

Currently it has a non-binding goal that a country should be able to get 10 percent of its energy capacity from its neighbours through interconnectors.

The Commission draft suggests this should be increased to 15 percent by 2030.

Poland has been calling for “an energy union” to reduce dependence on Russia and for common price negotiations with Russia.

Polish Prime Minister Donald Tusk with take part in a conference on energy security in Brussels on Wednesday with European Commission President Jose Manuel Barroso and European Energy Commissioner Guenther Oettinger.

The draft document says the Commission will examine whether “a procedure could be developed for gas which would contribute to increasing transparency of the market”.

But it also says the options would have to avoid any conflict with EU competition law.

EU member states will review all the options for strengthening Europe’s energy security at a summit in June. (Additional reporting by Alister Doyle in Oslo; editing by Jason Neely)

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