Friday, January 20, 2006

Gazprom cuts it again

During the gas crisis with Ukraine, one analyst said that Russia could cut supplies to Europe once without suffering any long-term consequences. This was at the generous end of the analytical spectrum on what Russia risked by cutting off supplies to Ukraine.

But it looks like they've cut it again--Cold Forces Further Cut in Europe's Gas Supplies.

The cold snap deepened on Thursday and forced gas monopoly Gazprom to further trim supplies to Europe, which analysts said highlighted Europe's risks of relying heavily on one major supplier.

With temperatures in Moscow plunging overnight to minus 30 degrees Celsius and to minus 50 C in parts of oil-producing Siberia, Gazprom has been forced to crank up supplies to domestic consumers.

The third straight day of freezing weather in Russia has seen deliveries to some of Gazprom's European customers, including Italy, Hungary and Croatia, fall 10 percent to 25 percent below volumes requested.

It just reinforces the view that the Kremlin doesn't think in terms other than it's narrow prerogatives. "But they couldn't foresee the coldest weather in 90 some odd years! This isn't their fault." Yeah, but this reduction would be understandable and forgivable. It is after all beyond the control of the Russians and the Kremlin. Take thsi one together with the original cut-off that was entirely within the control of the Kremlin and you've got Europe hanging out there blowing in a real chill wind subject to political calculations of the Kremlin and to the vagaries of the Russian winter. What other risk is left? Problems with infrastructure? How good is Russia really going to appear as a supplier if Europe looks real, real close at it right now? And isn't that going to be just what they do?

By the way, Ukraine is going to have to explain any gas it took this time and not allow the Kremlin to occupy the field with their spin. Europe may be more patient with Ukraine than with Russia but that patience is not going to survive continued threats to their gas supply by a Ukraine siphoning off. They have to explain it and it has to be justified or Ukraine risks losing support in Europe. That would not be a good thing.

So come out an hold a press conference guys and do it quick.

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