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UPDATE 4-EU moves to cut risks from winter gas crises

Published: 16 Jul 2009 17:06:36 PST

* States must be able to cope with 60-day cut in supplies * "Community Emergency" if EU loses 10 percent of gas imports * States must ensure unhindered flows across borders in crisis

BRUSSELS, July 16 - European Union countries must build new gas infrastructure to withstand future supply cuts of up to 60 days in winter, the EU's executive arm said on Thursday as it overhauled energy security rules.

The EU aims to reduce the risks from a possible repeat of January's gas crisis, when a pricing dispute between Russia and transit country Ukraine cut gas supplies to Europe during freezing weather.

Ukraine faces fresh problems with paying for Russian gas and the EU will host talks with Kiev, Moscow and international lenders on Friday to try to avert another crisis.

"Europe must learn the lessons of previous crises and make sure that European citizens are never again left in the cold," European Commission President Jose Manuel Barroso said.

About one fifth of EU demand is satisfied by Russian gas that flows through pipelines in Ukraine.

EU Energy Commissioner Andris Piebalgs said he had resisted what he described as a knee-jerk reaction of setting minimum levels for gas storage. He added EU countries could use other measures such as new supply routes or terminals for liquefied gas shipments by sea.

"Where are the biggest challenges? It's the Baltics," Piebalgs said. "The two countries where the biggest investments need to be made are Lithuania and Slovenia."

"The easiest steps are for Denmark, but Greece is also doing quite well," he added. "Germany is fine. Belgium is doing fine -- those countries that have decent storage capacity."

COMMUNITY EMERGENCY

Europe wants to reduce its reliance on Russian energy and EU countries signed an agreement with Turkey on Monday on the Nabucco pipeline, which is intended to provide gas from the Caspian and the Middle East.

The backers of the Nord Stream project to carry Russian gas directly to Germany through the Baltic sea pushed on Thursday for help with moving the project forward.

Russian President Dmitry Medvedev called on Sweden to give the go ahead, as the last country whose ecological approval is needed before construction can begin.

Under the new gas security rules, the European Commission would declare a "Community Emergency" if the EU lost more than 10 percent of its gas imports. EU countries would then have to help each other by ensuring unhindered flow of gas across their borders.

By the end of March 2014, member states will have to ensure their infrastructure is sufficiently diversified to deal with a cut of up to 60 days in freezing weather.

The German government and industry group BDI said energy companies should take the lead in managing gas crises.

"Only in very exceptional cases should the Commission step in," said BDI secretary general Werner Schnappauf.

The proposal now requires the approval of the European Parliament and member states, many of which are reluctant to cede control of energy supplies despite repeatedly calling on the Commission to help coordinate efforts.

EU energy ministers approved a similar proposal on oil stocks last month after stripping it of its most important provisions.

Piebalgs said EU states had been widely consulted on the new gas rules and were unlikely to weaken them.

"I think we have sufficient support to say they will not be watered down, because we have proposed a text that is optimum," he said.


Source: Reuters

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