Russia is experiencing near-record cold, with temperatures dropping down to -22 F in Moscow and lower elsewhere Jan. 18. Gazprom announced Jan. 18 that to address increased domestic energy needs, the state natural gas monopoly has reduced delivery to Europe, specifically affecting Hungary and possibly Bosnia-Herzegovina, which are surviving on reserve supplies. Gazprom has further warned that reductions could be Europe-wide very shortly. Had this emergency situation hit Russia a month ago, Gazprom's announcement would have been met with sympathy rather than suspicion. In light of Russia's cutting off gas exports to Ukraine — and consequently decreasing supplies to EU countries such as Germany and Poland — on Jan. 1, Europe is growing more eager to diversify its natural gas supply sources. The bitter freeze in Russia has increased internal natural gas consumption, dropped crude oil production by a quarter million barrels per day and required some power plant customers to switch to alternative fuels such as fuel oil. Gazprom's diverting natural gas for domestic consumption is understandable in this situation but does not increase Europe's confidence in Russia's ability to provide it with uninterrupted natural gas supplies. Austrian Chancellor and new EU President Wolfgang Schuessel — who was addressing the European Parliament when news of the latest Russian crisis broke — is seeking to diversify Europe's energy supplies and increase reliance on alternative energy sources. German Chancellor Angela Merkel is also concerned, since her country is one of the most dependent on Russian delivery. Central European countries such as Poland and Slovakia are historically dependent on natural gas routes worked out during the Soviet times. Each of these countries has reserves and alternative sources it can rely on during this particular incident, but they are all looking at alternative long-term solutions. Although contractually Gazprom cannot cut off delivery to Europe for any reason, in such an emergency nobody is expected to take legal action against the Russians. However, this incident will serve as yet more proof that Europe cannot rely solely on Russia for natural gas; this could affect the planned construction of the Northern European Gas Pipeline (NEGP) connecting Russia and Germany via the Baltic Sea. The project, already expected to be well over its $5.7 billion budget, is likely to not be cost-effective. Furthermore, though the politically-motivated NEGP is designed to bypass potential troublemakers in Poland and the Baltics, putting German natural gas supplies at the mercy of Russia's natural gas monopoly looks less and less likely. The Ukrainian incident has brought additional attention to a situation that normally would be considered an emergency, emphasizing Gazprom's already-precarious reputation in Europe.
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