Eni CEO says Ukraine wake-up call for Europe energy policy-paper

MILAN, March 8 Sat Mar 8, 2014 5:18am EST

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MILAN, March 8 (Reuters) - The crisis in Ukraine does not yet pose a threat to gas supplies but it is a wake up call for Europe to rethink its energy strategy, the head of Italian oil and gas group Eni said on Saturday.

In an interview with Italian daily La Stampa, Eni Chief Executive Paolo Scaroni said the standoff between Ukraine and Russia would not have an impact on gas supplies thanks partly to mild weather across Europe.

"But certainly if the tension continues I do have a few worries for next year," he said.

On Friday, Russian gas giant Gazprom warned it could stop shipping gas to Ukraine over unpaid bills, increasing pressure on Ukraine's supporters in Europe, which gets half its Russian gas through the country.

"In any case, precisely in light of this crisis, Europe needs to rethink its energy strategy," he said.

Gazprom halted gas supplies to Ukraine over unpaid bills at the beginning of 2009 prompting cuts to supplies of Russian gas to Europe during a cold winter.

Scaroni said that Italy's gas supply structure meant it was in a position to overcome any crisis involving a single supplier, albeit at an extra cost.

"But if another one (supplier) went down the problems would be serious," he said.

Italy, which imports around 90 percent of its gas needs, has long-term supply agreements in place with Russia, Algeria, Libya and the Netherlands.

In 2012 Russia accounted for around a third of overall imports but data from gas transport grid operator Snam on Friday showed Russian volumes were more than half of daily flows.

Violence in Libya has reduced supplies into Italy and last year Eni agreed to take less gas from Algeria as part of a renegotiation of its long-term gas contracts with the country.

Eni, Italy's biggest listed company, is one of Europe's biggest gas wholesalers.

Scaroni said it was improbable Russia would suspend its gas supplies through Ukraine unless there was the threat of actual war between the two countries, which he believed unlikely.

"The Ukrainians make $3 billion a year for the transit of Russian gas through their country. For them that's a large amount," he said.

Scaroni, who will be meeting with Gazprom's head on Tuesday, said it was crucial for Russia to be reliable as a supplier to its Western clients.

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