Google+ Followers

Thursday, 16 October 2014

Ukraine fears frozen conflict could yield winter energy crisis - FT.com

Ukraine fears frozen conflict could yield winter energy crisis - FT.com:



An elderly man walks near snow covered cars during a heavy storm in the Ukraine capital Kiev on March 23, 2013. Kiev administration declared a state of emergency in the city. AFP PHOTO/SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)©AFP
At the Foxtrot appliance store in Kiev, the must-have product these days is a Delonghi electric heater.
“This is the last one left of 20 delivered to our store just a day ago,” Oleksander, a sales clerk, said, pointing to one of the Italian-made devices and noting that sales have increased fivefold from a year ago.
The conflict is also now endangering Ukraine’s coal supplies. Mining activity in eastern Ukraine has been interrupted by the fighting while damage to railways has created transport bottlenecks. A Ukrainian army spokesperson this week accused Russian-backed militants of trying to seize railway hubs to control the flow of coal out of the region.The bonanza is one indication of the panic gripping Ukraine as winter approaches and the country teeters on the edge of an energy crisis.
Imports of Russian natural gas have been cut off since June amid a price and debt dispute that has run alongside their military confrontation in eastern Ukraine. That has already prompted cold showers as the government has resorted to rationing domestically produced gas by cutting centrally provided hot water to flats.
Petro Poroshenko, Ukraine’s president, is expected to discuss the energy situation with his Russian counterpart Vladimir Putin, when the two leaders meet at a summit of EU and Asian leaders in Milan that begins on Thursday. Yet Kiev’s energy vulnerability is regarded by analysts as another factor that has given Moscow and the rebels it supports the upper hand in a conflict that has killed more than 3,500 people.
“Russia has much more leverage over Ukraine now than in 2006 and 2009 when it shut off gas,” said Dmytro Marunich, a Ukrainian energy analyst, referring to previous energy disputes between Moscow and Kiev. “Through the separatist-held eastern mining regions, it now holds de facto controls over much of our coal and, in turn, electricity generation.”
Jean-Marie Guéhenno, president of the international crisis group, suggested Mr Poroshenko’s government could be at stake. “One big question is how this next winter is going to be,” he said, asking “whether the hardship that Ukrainians will have to suffer will undermine Poroshenko?”
Kiev mayor Vitali Klitschko was more upbeat, calling a winter energy crunch “the price of independence”.

In depth

Pro-Russian separatist
Pro-Moscow separatists in eastern Ukraine have escalated the political turmoil that threatens to tear the country apart

Further reading
So far, Ukraine has managed to stockpile 16bn cubic metres of gas in underground storage tanks. That is still 5 bcm less than it needs to satisfy peak winter demand.
Ukraine has sought to make up the shortfall by purchasing surplus Russian gas from EU member states such as Slovakia and Hungary. But Russia’s Gazprom has since clamped down on the practice by pressuring those governments.
Meanwhile, Ukraine’s largest private thermoelectric power producer warned this weekend that some of its generators may be shut down within weeks because of a coal shortage.
“Coal leftovers will allow us to work 10 to 20 days depending on the type of (power) station,” DTEK’s director Maksym Timchenko said. The company has some 370,000 tonnes of stockpiles, far short of the 1.5m tonnes it had a year ago.
Once self-sufficient, Ukraine has in the past weeks started to import coal from South Africa, Australia and even Russia. But a growing pile of unpaid utility bills in the highly populated cities under separatist control in the east have complicated efforts to finance imports.
“We should have long ago cut off this region,” Yuriy Nedashkovsky, head of the state nuclear power company, which produces half of the country’s electricity needs, said this week.
The country is bracing for an energy diet. Supplies to gas-guzzling chemical factories are being limited. Officials are also considering longer winter breaks for schools to conserve utility consumption during peak winter periods.
Many Ukrainians are not waiting to find out if their president’s talks this week with Mr Putin will produce results.
Citizens in Kiev and other cities are rushing to better insulate their flats by replacing wooden-framed windows dating back to Soviet days with more modern ones.
Meanwhile, some villagers are stockpiling firewood. In a twist of fate, many homes in rural regions still have antiquated furnaces that can burn either wood, coal or natural gas.
But most Ukrainians live in Soviet-era city flats with centralised power and heating systems and are not so fortunate. “I’ve already bought candles, a portable recharging battery and am now looking to buy a solar-powered charger for my computer and mobile phone,” a European executive working in Kiev said.
In his sales pitch, Oleksander, shop assistant in Kiev, touted the Delonghi electric heater’s ability to continue warming an apartment for about an hour without power.
He admitted, though, it would be useless if hours-long electricity blackouts become rampant. “We unfortunately don’t have anything in stock to help customers keep their flats warm if the electricity and gas both get cut off,” he said.
'via Blog this'