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Cold Snap Sign of European Dependence on Russian Gas

Russia’s natural gas monopoly during the weekend said it was having trouble keeping up with European demand during a brutal cold snap gripping much of the eurozone. Russian Prime Minister Vladimir Putin had asked Gazprom to do all in its power to meet energy demands and by Monday, European officials – many of whom are coping with below-zero temperatures – said things were more or less back to normal. But what's normal? European leaders, with Washington's help, have tried to break Russia’s grip on the European energy sector but, so far, the winter of 2012 shows there's a long road ahead.

European leaders last week complained that Moscow had reduced the flow of natural gas to some of its downstream consumers in the eurozone. Russian Prime Minister Vladimir Putin during the weekend called on Gazprom authorities to "exert maximum efforts" to meet European demands but said additional volumes might be difficult because of contractual limitations.

Most of the 200 or so deaths attributed to the arctic weather conditions were, ironically enough, in Ukraine, the country that hosts 80 percent of Russia's natural gas bound for European consumers. In January 2009, Gazprom's customers were left in the cold when natural gas supplies through Ukraine were severed because of contract disputes and outstanding debts. Three years and one jailed former Ukrainian prime minister later, it appears not much has changed for European consumers except the date and the thermometer reading.

U.S. officials during a weekend visit to Bulgaria said they respected Sofia's decision to impose a moratorium on shale natural gas. That leaves at least some of Europe's alternative options for natural gas off the table for the foreseeable future. Bulgaria could play a role, however, in the highly-anticipated and hugely-controversial Nabucco pipeline, a project that U.S. and EU officials see as part of a package of alternatives for non-Russian gas. During her visit to Sofia, U.S. Secretary of State Hillary Clinton said Washington's Eurasian energy czar Richard Morningstar was headed to the region this week to discuss energy options. Morningstar, however, has seemed to question the financial aspects of the Nabucco natural gas pipeline.

By Monday, European officials had said natural gas supplies from Russia were back to normal for some of Gazprom's customers.  But where are the cries for energy independence? Why no political grandstanding from Clinton, especially after Moscow slapped down another effort to sanction Syria? With 200 people dead, it seems, at least for February, that European consumers are happy to be dependent on Russian natural gas so long as the thermostat keeps working.  So much for energy independence, huh?

By. Daniel Graeber of Oilprice.com



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