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Norway could provide little help if Russia cuts flows to Ukraine
March 12, 2014 / 5:16 PM / 4 years ago

Norway could provide little help if Russia cuts flows to Ukraine

* Norway could up flows by up to 130 mcm/d for short time

* EU is well prepared for potential Russian gas cut

* Gas already flowing to Central Europe to prepare for cuts

By Gwladys Fouche and Henning Gloystein

STAVANGER/LONDON, March 12 (Reuters) - Norway could increase gas supplies to Europe to make up for the amount lost if Russia cuts off flows through Ukraine, but it could provide that help only for a day or two.

Norwegian pipeline operator Gassco told Reuters on Wednesday it could provide up to 130 million cubic metres (mcm) a day of extra gas for a short time, which is slightly more than Russia currently pumps to Europe via pipelines that pass through Ukraine.

“The (Norwegian gas) production system is more or less tailor-made for the markets it serves. There is some flexibility, but there are some very strong limitations,” said Brian Bjordal, head of Gassco.

“It (the extra capacity) would be in the 120 to 130 mcm per day range,” he said, but added that Gassco could keep up these flows for only a day or two.

Tensions between Kiev and Moscow are high since Russia seized control of the Crimea region earlier this month. Russia’s Gazprom also has threatened to cut supplies to Ukraine after Kiev failed to pay its latest bill to Moscow for its own gas.

Russia provides a third of Europe’s gas needs, and a third of its gas exports to the European Union pass through Ukraine. The rest goes through other routes such as the Nord Stream pipeline from Russia through the Baltic Sea into Germany.

Norway, Europe’s second-biggest gas supplier, pumps most of its exports through pipelines to Britain, Germany, the Netherlands, Belgium and France and is the biggest supplier in northwest Europe.

An increase in Norwegian exports would not directly benefit central and southeastern Europe, where Russian supplies dominate, but it could free up gas to be exported from Germany, which has large storage capacity, to the East.

Slovakia, which borders Ukraine and would be hit first by a Russian cut, is already ramping up gas imports from Germany through the Czech Republic to preserve stockpiles as a buffer against potential disruption to Russian supplies.

EU COULD DEAL WITH CUT

Analysts said a short-term supply disruption from Russia to Ukraine is likely after Kiev failed to pay its latest bill, but they also said the European Union would be able to deal with such a disruption.

“Gazprom disrupting gas to Ukraine for non-payment of its gas bills seems an almost inevitable occurrence,” Energy Aspects said in a research note on Wednesday.

But healthy gas stocks would help Europe deal with a cut.

Following an unusually mild winter and a warm start to spring, regional gas stocks are up almost 40 percent, or 10 billion cubic metres, from the level a year ago, when a long winter had almost depleted stocks.

“A short-lived (up to a week-long) disruption of flows through Ukraine could be comfortably met with gas in storage,” Energy Aspects said. (editing by Jane Baird)

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