Now in its tenth day, the standoff between Russia and Ukraine over letting natural gas flow to Europe through Ukraine has cost Russia’s gas company, Gazprom, $1.2 billion. But it’s costing Europe a whole lot more as they’re left out in the cold.
While Ukraine and Russia futz around trying to decide on when they’ll let natural gas flow to Europe, Bulgaria and Slovakia are taking action to get an energy supply for themselves, dusting off their nuclear reactors. Even though Slovakia closed down a nuclear facility just a few weeks ago, it’s now re-opening it to avoid blackouts around the nation, or so they say.
Rod Adams at Atomic Insights argues that Slovakia is opening its nuclear power plant because it never really wanted to close down it’s plants in the first place. He points out that Gazprom intends to steadily increase the price of gas to Europe, while at the same time forcing the continent to become more dependent on that same natural gas:
Lest anyone think that the gas crisis in Europe is only related to a pricing dispute with Ukraine over their historical discounts, here is a March 2008 quote from Average gas price for Europe could rise to $400 in 2008 – Gazprom
Gazprom’s CEO said on Friday that the average price for natural gas for Europe in 2008 could reach $400 per 1,000 cubic meters, 13% more than previously expected.
“The price in Europe now exceeds $370. We believe the average price in 2008 could be $378 and could even reach $400 per 1,000 cubic meters,” Alexei Miller said at a meeting with Russian President Vladimir Putin.
Miller said the price hike was necessitated by the weakening U.S. dollar. However, he said the price increase would not affect the growing demand for natural gas on the European market.
“Gazprom supplied 151 billion cubic meters of gas to the EU in 2007, and we plan [to ship] 157 billion cubic meters in 2008,” he said.
He added that gas supplies to Western Europe were based on long-term contracts, most of which would only expire after 2030.
In other words, steadily increasing gas prices for all of Europe is part of an orchestrated plan that includes long term contracts and dependent customers. I like the spunk that is being displayed by Slovakia’s leaders, who have essentially stated that they would rather beg forgiveness from the European Commission than be held hostage by Russian gas suppliers.
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