Ukraine Cuts Off Cheap Russian Gas Supply To EU, Slovakia Threatens Refugee Aid Cuts In Retaliation
(MENAFN- Live Mint) Russia halted gas supply to Europe this week after Ukraine refused to renew a five-year transit deal. The development came even as some nations battled sub-zero temperatures - with Slovakia indicating plans for 'retaliatory action' against Kyiv. Inventories across the continent have been falling rapidly in recent years and traders will likely find it a costlier prospect to refill storage for the next heating season.
Slovakia has threatened retaliation against Ukraine for its decision - with Prime Minister Robert Fico outlining details on Thursday. A video message posted on facebook said the Smer party would consider cutting electricity supplies to Ukraine, lowering aid to Ukrainian refugees, and demanding the renewal of gas transits or compensation for losses suffered by Slovakia.
What was the deal?
Meanwhile the Hammerfest liquefied natural gas plant in Norway has also halted operations until January 9 due to a compressor failure.
What has been the impact?
The European Union has insisted that most member states will be able to cope despite concerns about faster storage withdrawals. European natural gas futures have climbed to their highest since October 2023 after the curb came into effect on Wednesday. It is however to note that there is no risk of an immediate energy crisis or shortfall in Europe. The 27 nation bloc does not expect any immediate impact on consumer prices.
What about the countries outside EU?
Countries such as Moldova - which are not part of the grouping - are already suffering shortages. Thousands have also been left without heating and hot water in the Transnistria region after Russian gas supplies were cut. Local authorities have also been forced to close all industrial companies except food producers.
The mainly Russian-speaking territory which split from Moldova in the 1990s as the Soviet Union collapsed and currently houses about 450,000 people and 1500 Russian troops. The other country has been pumping about 2 billion cubic metres of gas per year to Transdniestria - including the power plant which also provided energy for the whole of Moldova.
Vadim Krasnoselsky - head of the separatist territory - has now urged residents to burn firewood for heating and warned about unavoidable blackouts. The local energy company cut heating and hot water to households on Wednesday as the gas cut went into effect. It also urged families to keep warm by gathering in a single room, covering windows with curtains or blankets and using electric heaters. Krasnoselsky said on Friday that the region had gas reserves that could last for 10 days of limited usage in northern parts and twice as long in the south. The the main power plant had switched from gas to coal and should be able to supply electricity to residents in January and February.
(With inputs from agencies)
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