WHEN Vladimir Putin was bribing Viktor Yanukovych, then the president of Ukraine, to turn down a trade deal with the European Union last year, one of the sweeteners was cheap gas. The copious Russian gas Ukraine burns through every year—it is a profligate user of energy—would be priced at just $268.5 per thousand cubic metres (tcm), which for 2013’s total of 28 billion cubic metres (bcm) works out at $7.5 billion. Since February’s revolution ousted Mr Yanukovych, gas has become a stick, not a carrot. On April 1st Alexei Miller, the chief executive of Russia’s gas giant, Gazprom, said that the price of Ukraine’s gas was going up by 44%, to $385.5 per tcm.
This is ominous news for Europe. Ukraine already owes Gazprom $1.7 billion, according to Mr Miller. If Ukraine continues not to pay its bills—and without outside help, it cannot—Gazprom can cut it off. Such a dispute need not, in principle, have any effect on the gas that flows through Ukraine to other countries farther west (see map). But if Gazprom reduces the flow of gas to reflect the fact that Ukraine no longer has a right to its 28bcm, and Ukraine takes some of that gas anyway, or if Gazprom shuts down the pipelines going through Ukraine completely, Europe’s supplies get hit. Europe gets 24% of its gas from Russia, and half of that—80bcm a year—passes through Ukraine. An argument between Russia and Ukraine led to the pipelines shutting down for two weeks in January 2009, to much consternation downstream.
In the short term (weeks, or a few months) such a disruption would be less damaging now than it was then. But in the medium term (many months, or a few years) Europe remains highly vulnerable to Russian control over gas supplies. This vulnerability is one of the reasons why Mr Putin thinks Europe will not act decisively against him over the annexation of Crimea, or any further territorial depredations he may have in mind. But it is a vulnerability that can, over time, be decreased; and one which Russia would lose a lot by exploiting.
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At the moment, a lapse in supplies would see the seasons in Europe’s favour. European countries do not depend on Russian gas in the summer months (though they do refill their storage facilities with it then). And the mild winter just past means that those stores are unusually full. Richard Mallinson of Energy Aspects, a consultancy, says EU countries have 36bcm of gas in store, about 15bcm more than this time last year. They could store twice that; the EU’s total storage capacity is 75bcm.
It is a useful cushion, but a lumpy one. Some European countries have lots of storage: Latvia has at least a years’ worth. Others (Moldova, Macedonia) have none. Thus ways must be found to get gas from the places where it is stored to the people who need it. Europe’s pipeline grid is not particularly well suited for this. National gas companies have long disliked cross-border interconnectors; a free flow of gas means more choice for consumers and thus lower prices. But pressure from the EU—notably in the form of the “third energy package” of liberalisations—and a growing concern, since 2009, about the risks of relying on Russian gas mean that more interconnectors have now been built, along with pumps that can reverse the flow in transit pipelines.
Poland has been connected with the Czech Republic via the small Stork pipeline since 2011; work on a larger link, with a capacity of up to 10bcm, will start before 2017. Slovakia has just opened a pipeline to Hungary. Germany can now send gas to Italy, as well as to Poland and the Czech Republic. If the political will to provide mutual support is there—quite a big “if”, since it was not very apparent in 2009—the means to do so are better than they were.
Estonia, Latvia and Lithuania, though, are not connected to any source of gas save Russia. Work could start on an interconnector from Poland to Lithuania in 2018; until then Latvia’s abundant storage provides some insurance against strong-arming. Bulgaria also has a particular problem. It gets almost all its gas from a Russian pipeline that crosses Ukraine, and it has limited storage (less than two months’ consumption). It is hurrying to build interconnectors to Serbia and to a planned liquefied natural gas (LNG) terminal in Greece.
Even good interconnection is only a solution for as long as there are gas supplies to feed the interconnectors. If the gas ceased flowing through Ukraine, where might more be found after stores were depleted?
One answer is, surprisingly, Russia. If Russia were to shut down the pipelines across Ukraine with the principal aim of hurting Ukraine itself (though accepting mind-focusing discomfort downstream as an added bonus) it would probably continue exporting gas by other