Commission staff working document - Accompanying document to the Proposal for a Regulation of the European Parliament and of the Council concerning measures to safeguard security of gas supply and repealing Directive 2004/67/EC - The january 2009 gas supply disruption to the EU : an assessment {COM(2009) 363}
Date: 2009-07-16
Institutions: European Commission
Subjects: gas, gas supply, harmonisation of standards, natural gas, report, safety standard, security of supply

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.7.2009 
SEC(2009) 977 final 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying document to the 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

concerning measures to safeguard security of gas supply  
and repealing Directive 2004/67/EC 

THE JANUARY 2009 GAS SUPPLY DISRUPTION TO THE EU:  
AN ASSESSMENT 

{COM(2009) 363} 

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INTRODUCTION  

From 6-20 January 2009, gas flows were interrupted from Russia to the EU via Ukraine. A 
majority of Member States were affected directly and indirectly. Although the disruption was 
a  commercial  matter  between  Gazprom  of  Russia  and  Naftogaz  of  Ukraine,  the  EU  was  in 
regular contact with both parties before the onset of the disruption and throughout the event 
and was instrumental in the agreement on creating an international monitoring mission as well 
as facilitating negotiations on an agreement for gas supplies into the EU to resume.  

This paper considers how the crisis developed and why existing provisions were not enough 
to avoid major disruptions to EU gas supplies in January 2009. It considers what the EU can 
learn  from  these  events  in  order  to  make  the  framework  more  resilient  and  effective  in 
responding  to  gas  supply  threats,  both  in  an  emergency  situation  and  over  the  medium  to 
longer term.  

This  paper  also  responds  to  a  specific  request  from  the  European  Parliament  and  from  four 
individual  MEP's  for  an  analysis  of  the  Russia-Ukraine  gas  crisis  including  the  lessons 
learned.  

It reflects discussions and consultations which the Commission has held with Member States, 
including in the Energy Council and Gas Coordination Group, the European Parliament and 
the  industry,  including  Eurogas1,  the  European  Federation  of  Energy  Traders  (EFET)2,  the 
European  Energy  Regulators  Group  (ERGEG)3,  and  Gas  Infrastructure  Europe  (GIE)4, 
Eurelectric and the International Federation of Industrial Energy Consumers (IFIEC), as well 
as the assessment of the International Energy Agency. 

BACKGROUND 

One  quarter  of  all  energy  consumed  in  the  EU  is  gas.  58%  of  this  gas  is  imported.  Of  this, 
42% comes from Russia, and around 80% of EU imports of gas from Russia pass via Ukraine. 
Among the 8 new eastern European Member States, dependence on Russian imports averages 
77%. In practical terms, some 300-350 million cubic metres per day (mcm/day) of gas passes 
through  Ukraine  towards  the  EU,  around  one  fifth  of  total  gas  demand  in  the  EU.  Ukraine 
transits  the  same  quantity  of  gas  on  behalf  of  the  EU  as  it  consumes  in  its  national  market 
(around 300 mcm/day in winter). 

In  November  2008,  the  European  Commission  announced  a  revision  to  the  Gas  Security  of 
Supply Directive 2004/67/EC in its assessment5 on the grounds that "today's legal framework 
could  be  improved.  In  particular  greater  harmonisation  of  security  of  supply  standards  and 
pre-defined emergency measures on regional and EU levels are needed".  

The  EU  legal  framework  for  gas  security  of  supply  is  largely  regulated  under  the  internal 
market framework, which governs issues such as transparency and access to networks, as well 

1 
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3 
4 
5 

Letter to Commissioner Piebalgs of 22 April 2009 
Letter to Commissioner Piebalgs of 30 March 2009 
Letter to Commissioner Piebalgs of 10 February 2009 
Letter to Commissioner Piebalgs of 30 April 2009 
Communication of the Commission … 

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as customers' rights. Trans-European Networks for Energy funding is also available to support 
key internal supply infrastructure which has European priority6.  

As far as the response to potential supply disruptions is concerned, the Gas Security of Supply 
Directive  and  the  established  Gas  Coordination  Group  are  the  most  important  instruments, 
complemented  by  various  levels  of  producer  consumer  dialogue,  including  the  EU-Russia 
energy  dialogue,  EU  energy  relations  with  Norway,  in  the  framework  of  the  EU-Ukraine 
Memorandum of Understanding (MoU) on Energy as well other dialogues with producing and 
transit countries.  

January 2009 is not the first time that gas supplies to the EU have been disrupted. Tensions 
between Russia and Ukraine and Russia and Belarus have been raised several times since the 
break up of the Soviet Union due to the continuing difficulties to agree on the details of a new 
gas  transit  and  supply  regime.  The  absence  of  a  long  term  agreement  has  led  to  several 
disputes  translating  into  supply  uncertainty  at  the  start  of  calendar  year.  For  the  EU,  with 
respect  to  EU’s  gas  supplies  from  Russia  transiting  through  Ukraine,  the  most  serious 
disruption  before  that  of  January  2009  occurred  in  January  2006.  On  that  occasion,  gas 
supplies to the EU were restored after one day of disruptions and available storage capacities 
easily made up the shortfall (some 80 mcm). 

In order to respond to increasing concerns of possible disruptions of gas supplies to the EU, 
several  initiatives  were  developed  by  the  European  Commission.  An  Early  Warning 
Mechanism  has  been  developed  within  the  framework  of  the  EU-Russia  Energy  Dialogue 
based on establishing direct communication links between the European Commission and the 
Government of Russia for notifying in advance possible supply disruptions. Additionally, the 
Thematic  Groups  of  the  Energy  Dialogue  address  potential  supply  and  demand  risks  in  the 
medium and long-term. At the Permanent Partnership Council meeting in October 2008, the 
EU  and  Russia  agreed  to  enhance  the  Early  Warning  Mechanism  and  include  also  practical 
steps  to  resolve  supply  disruptions.  Moreover,  in  the  implementation  of  the  EU-Ukraine 
energy MoU a specific working group has been established to address the issue of enhancing 
the security of energy supplies. In this context, an International Investment Conference on the 
modernisation  of  Ukraine’s  gas  transit  system  was  hosted  by  the  European  Commission  on 
23rd  March  2009  in  Brussels,  which  resulted  in  an  agreement  between  the  Commission, 
Ukraine and the international financial institutions (EIB, EBRD and World Bank) on the way 
forward  for  the  reform  and  modernisation  of  Ukraine’s  gas  transit  system.  In  addition,  an 
Early  Warning  Mechanism  is  under  development  with  Belarus  and  energy  discussions  with 
Moldova have also addressed the issue. 

BRIEF OVERVIEW OF THE JANUARY 2009 GAS CRISIS  

The  January  2009  gas  crisis  resulted  from  an  unresolved  commercial  dispute  between 
Naftogaz  (Ukraine)  and  Gazprom  (Russia).  Reportedly,  Gazprom  stopped  supplying  gas  for 
Ukrainian consumption on the 1 January 2009 while gas to be transited through Ukraine for 
European  consumption  continued  to  be  delivered  to  Ukraine.  Normal  transit  to  the  EU 
continued through 1st January. 

6 

Since 1995, TEN-E has supported 94 gas interconnection projects, with a total of €143,000,000  

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On  2nd  January,  gas  deliveries  to  several  European  Member  States  were  affected,  notably 
Poland,  Slovakia,  Hungary,  and  above  all  Bulgaria  and  Romania.  On  the  same  day,  Czech 
Prime Minister Topolanek (as President of the Council) met consecutively with Russian and 
Ukrainian  representatives.  In  parallel,  Czech  Deputy  Prime  Minister  for  European  Affairs 
Vondra met with the Gazprom deputy chairman, Alexander Medvedev. On 8th January 2009, 
President Barroso held a meeting with the CEO of Gazprom. Alexei Miller.  

Until midnight of the 6th January, minor reductions of gas volumes were encountered in the 
EU,  gradually  increasing  to  33%  on  the  Western  Balkan  route  and  11%  at  the  Western 
Ukraine entry points. From 1 am on the 6th January, it was reported that all supplies through 
Western Balkan route were cut to Romania, Bulgaria, Greece, FYROM and Turkey. At 10am 
on the 6th January only 10% of gas was reported as flowing to Slovakia, the main entry point 
for Russian gas supplies towards the EU, to be distributed further to Austria, west Hungary, 
Czech Republic, Germany, Italy, France, Slovenia and Croatia. Very low level of gas flows 
was  reported  from  Poland  and  the  east  Romania  entry  points.  East  Hungary  received  only 
20% of gas, which also affected supplies to Serbia and Bosnia and Herzegovina.  

On the night of 6th to 7th January, all supplies from Russia through Ukraine to the EU were 
cut. There were no gas supplies from Russia to Europe from 7 January to 20 January.  

In  response,  the  EU,  led  by  the  Czech  presidency  and  the  Commission,  started  their  efforts 
aiming to facilitate an agreement between the partners at two levels: the Russian government 
and  Gazprom  in  Russia,  and  the  Ukrainian  government  and  Naftogaz  in  Ukraine.  This 
resulted in the signing of a monitoring agreement between Ukraine, Russia and the EU on 9th 
January, which provided for independent monitors from all the involved parties to oversee the 
gas  transit  on  Russian  and  Ukrainian  territory.  The  agreement  was  ratified  by  all  parties  in 
Brussels  on  12th  January.  As  early  as  8  January,  the  European  gas  industry  associations, 
including Eurogas and Gas Infrastructure Europe (GIE), had identified experts to participate 
in  the  EU  monitoring  team  along  with  the  Commission’s  representatives.  These  monitors 
were immediately dispatched to monitor the situation with respect to gas flows on the ground. 

On 17th January, Russia hosted a high level summit in Moscow, with the participation of the 
EU  and  the  Russian  and  Ukrainian  representatives.  This  resulted  on  18th  January  in  an 
agreement between Russian Prime Minister Putin and Ukrainian Prime Minister Timoshenko. 
On 19th January, within the scope of this political agreement, Gazprom and Naftogaz signed 
new 10-year agreements on the purchase of gas by Ukraine and the transit of gas to the EU 
via Ukraine. On 20th January, normal gas transit towards the EU was resumed 

The  EU  was  not  the  only  victim  of  the  crisis. Other non-EU countries in south-east Europe 
suffered  significant  disruptions  to  their  energy  supply,  with  the  international  community 
stepping  in  to  supply  emergency  fuel  aid  to  Moldova.  Finally,  both  Russia  and  Ukraine 
suffered  damage  to  their  reputations  as  reliable  energy  partners  for  the  EU  as  well  as 
substantial  losses  of  revenue  (for  example  Gazprom  estimates  its  lost  sales  to  the  EU  to  be 
around $2 billion in the first three weeks of January). 7.  

7 

Additional  information  on  the  chronology of  the  events, including  records  of gas volumes  and  flows, 
can be found in the comprehensive IEA report The Ukraine-Russia Gas Dispute (20.01.2009) and the 
IEA Secretariat's note Overview of the Russia - Ukraine gas dispute of January 2009 (11 March 2009). 

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LEADING UP TO THE CRISIS: EARLY WARNING AND CRISIS PREVENTION   

On 18th December 2008, Gazprom announced that it would interrupt supplies to Ukraine as of 
1st  January  2009  unless  agreement  was  reached  over  Ukraine's  outstanding  payments  and  a 
new contract signed. Russia officially activated the EU-Russia Early Warning Mechanism on 
18th  December  2008.  The  Russian  Deputy  Prime  Minister  and  Chairman  of  the  Gazprom 
Board of Directors Viktor Zubkov wrote to President Barroso and 27 Member States to warn 
them  that  a  gas  interruption  could  be  inevitable  as  a  result  of  the  impending  gas  supply 
dispute with Ukraine. 

Political  contacts  between  the  Commission  (Commissioner  Piebalgs  and  President  Barroso) 
and  the  Russian  authorities  and  leaders  of  Gazprom  took  place  over  the  Christmas  period. 
President Barroso spoke to Prime Minister on 31st December and again on 6th January 2009, 
when he also spoke to the Ukrainian Prime Minister, Ms Timoshenko.  

In anticipation of difficulties, the Commission alerted the Gas Coordination Group and other 
concerned parties on 19th December and convoked a meeting of the Gas Coordination Group 
for 9th January 2009. In parallel, a monitoring system was put in place by Gas Infrastructure 
Europe at the entry points  of  the  EU  involving Poland, Slovakia, Hungary and Romania  on 
the 3rd January.  

The  European  Network  of  Energy  Security  Correspondent  (NESCO)  was  also  used  to 
exchange information in an impromptu way on the evolution of the situation in EU Member 
States as well as other third countries concerned.  

Although the EU-Russia Early Warning Mechanism had warned about the possibility of the 
crisis in late December 2008, there was no further notification by Russia that supplies to and 
through  Ukraine  would  be  in  fact  be  totally  cut,  which  occurred  on  the  6th  and  7th  January. 
There  was  no  contingency  plan  at  national  or  EU  level  as  to  how  to  react  to  an  unforeseen 
major disruption, which industry representatives had thought "impossible". 

At  the  EU  level,  a  major  difficulty  in  assessing  how  best  to  respond  to  the  crisis  was  the 
limited access to important technical information with respect to the gas system and gas flows 
at  a  national  and  an  EU  level.  There  was  not  enough  reliable  information  about  gas  flows, 
how  much  gas  was  in  the  system,  and  demand  patterns.  This  situation  reflected  on  the  fact 
that  qualitatively  different  systems  exist  across  Member  States,  with  unequal  access  to 
information by market players and others, including public authorities.  

As the crisis developed, the Gas Coordination Group helped to fill this information gap and 
enabled an exchange of detailed daily information and the analysis of the gas situation of the 
different EU Member States and Countries of Energy Community Treaty.  

However, the crisis came too early to benefit from the provisions of the third internal market 
package that had been proposed by the European Commission on September 2007 and only 
recently finally adopted, which includes an obligation to publish data on forecast and actual 
gas flows, amount of gas in storage and available pipeline and storage capacities. 

DIFFERENT MODELS OF DATA PROVISION RELATING TO SECURITY OF GAS 
SUPPLY IN MEMBER STATES  

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i)  Live,  updated  and  aggregated  information  on  demand  and  supply  forecasts,  transmission 
and capacity detail and storage levels, disclosed to the public in real-time (e.g. UK).  

ii) Daily information on demand and supply forecasts, storage capacities, contracted quantities 
and consumption patterns confidentially shared with the regulator alone (e.g. Austria). 

iii) No information on storage levels even for the regulator or government representatives 

The absence of reliable information about the gas transiting through Ukraine to the EU also 
hindered  decision-making.  In  effect,  the  EU  had  become  victim  to  a  commercial  dispute 
between two non-EU companies resulting partly from their move to put their relationship on a 
more commercial basis. The EU was aware of the shut-downs of gas supply that were causing 
major difficulties for industrial and household consumers, but did not have adequate access to 
information about the flows of gas which were contracted commercially for distribution to its 
customers.  

The uncertainties of whether and to what extent the EU would be affected, and of how much 
gas was in the transit system once supplies were reported to be resumed, were major barriers 
to developing a coherent response.  

Lessons for the EU:  

A disruption on the scale of the January 2009 gas disruption might happen again. The EU is 
vulnerable  not  only  to  commercial disputes  as  happened  in  this  case,  but  also  to  the  risk  of 
accidents or technical failures on major gas import pipelines. 

The early warning and crisis prevention mechanisms at the EU level are weak in dealing with 
a sudden and unforeseen crisis. The situation at the moment is largely based on an assumption 
that national responses exist and will be enough.  

A major barrier to understanding the situation and taking appropriate decisions was a lack of 
transparency and access to up-to-date information. Decision makers at both the political and 
market  level  need  reliable  and  aggregated  information  about  demand,  supply  and  storage  in 
order  to  take  adequate  actions  responding  to  the  situations  of  gas  supply  disruptions.  Crisis 
prevention  measures  depend  on  having  such  information  available  and  updated  on  a 
permanent basis.  

The  reliability  of  reporting  mechanisms  is  even  more  important  in  an  emergency  situation. 
Comprehensive  market  data  needs  to  be  available,  without  restriction,  on  a  daily  basis, 
bearing  in  mind  the  possible  need  of  recipient  bodies  to  respect  the  standard  commercial 
confidentiality requirements.  

There is inadequate coordination and coherence between national provisions to anticipate and 
avoid  crises.  Greater  consistency  in  crisis  prevention  might  be  achieved  for  example  by 
regular  exchanges  between  Member  States  about  the  situation  of  emergency  measures  and 
peer  reviews  of  risks  assessments  among  Member  States.  Existing  bodies,  such  as  the  Gas 
Coordination Group and the Network of Energy Security Correspondents have to be involved. 

In spite of discussions in the Gas Coordination Group, where some disruption scenarios (e.g. 
Yamal disruption) had been presented before along with the Winter Outlook of GIE, all based 
on  rough  data,  common  scenarios  are  lacking.  There  are  no  common  scenarios  for  dealing 

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with  emergency  situations  prepared  in  advance,  involving  regional  or  EU  level  risk 
assessments  and  detailed  assessments  of  the  market  situation  (demand  patterns,  main 
suppliers, alternative sources, storage possibilities etc). If these had been available, e.g. in Gas 
Coordination Group, it may have been easier to put in place contingency plans  to cover for 
disruption of major supply route (e.g. accident, if not commercial dispute).  

Scenarios could also be usefully coordinated with infrastructure planning procedures, via the 
proposed European Network of Gas Transmission System Operators (ENTSO – G).  

Enhanced  engagement  with  EU’s  major  supplier  and  transit  countries  can  also  provide  an 
appropriate 
for  developing  early  warning  mechanisms  and  adequate 
communication links for notifying of possible difficulties and facilitating possible solutions in 
case of disruption of gas supplies.  

framework 

THE  EXTENT  OF  THE  CRISIS:  ASSESSMENT  OF  THE  EMERGENCY  PREPAREDNESS  AND 

RESPONSE MECHANISMS 

The January 2009 gas disruptions resulted in the most serious gas supply crisis to hit the EU 
in  its  history,  depriving  EU  Member  States  of  20%  of  their  gas  supplies  (30%  of  imports). 
Coinciding with a cold spell in many parts of Europe, it demonstrated the vulnerability of the 
EU  and  some  of  its  Member  States  to  gas  disruption  and  resulted  in  important  economic 
repercussions in a number of EU Member States8. Within days of the supply interruption of 6 
January, a total of 12 Member States and Member Countries of the Energy Community were 
affected.  It  was  also  clear  that  the  interruption  could  not  be  resolved  by  individual  EU 
companies or TSO's alone. 

Although the existing Gas Security of Supply Directive obliges all Member States to have gas 
emergency measures, the emergency plans, triggers and the extent of these mechanisms differ 
from  country  to  country,  or  are  not  yet  even  developed.  During  the  January  crisis,  some 
Member  States  declared  emergencies  as  a  result  of  their  national  situation  and  launched 
emergency  plans.  Some  adopted  and  implemented  concrete  plans  and  measures  on  the  first 
day of crisis, while others had no detailed plans in place.  

The  level  of  preparedness  of  the  different  Member  States  varied  significantly.  Where 
emergency planning existed, the emphasis was on small, practical steps at a local or national 
level. Also, the measures applied, such as use of gas storage, focussed on the first reaction to 
supply cuts in the short term. Substantially increasing reliance on coal and fuel oil would also 
have  been  unsustainable  due  to  environmental  constraints  (e.g.  Large  Combustion  Plant 
Directive  and  emission  quotas).  Had  the  crisis  continued  for  a  longer  period,  or  spread  to 
other parts of the EU, the impact could have been much more devastating in economic, social 
and environmental terms.  

The Gas Coordination Group met for the first time on 9th January and immediately identified 
a  list  of  response  measures.  The  first  response,  where  this  was  possible,  was  to  access  gas 
from storage. However, the rates of release and extent to which gas was available varied from 
Member State to Member State (e.g. storage represents 35% of gas demand in Bulgaria, 97% 
in  Slovakia).  Most  Member  States  and  Energy  Community  countries,  with  the  exception  of 

8 

Source: Regional Centre for Energy Policy Research, Budapest 

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Bulgaria, Moldova  and Serbia, were able to substitute the supplies from Russia in the  short 
term,  either  by  drawing  on  storage,  by  importing  additional  spot  LNG  cargoes  (such  as 
Greece)  by  fuel-switching  and  by  extra  commercial  deliveries  from  neighbouring  countries 
(such as Austria, Hungary and Czech Republic).  

Diversification of routes but especially sources was another widely used emergency measure: 
imports from alternative suppliers increased, namely Norway and Libya, along with increased 
Russian  imports  via  Belarus  and  Turkey.  In  some  cases,  gas  was  cut  off  to  large  industrial 
companies (for example in Bulgaria, Romania, Hungary and Poland) in an attempt to keep gas 
flowing to households. 

Some fuel switching took place, particularly towards fuel oil for heating and coal for power 
production (including Austria, Slovakia, Greece, Poland, Bulgaria, and Romania). LNG also 
proved itself a useful alternative, although the full compensation of the missing volumes was 
not possible.  

The existing Gas Security directive encourages Member States and companies to collaborate 
with neighbouring countries, including on access to storage. Such arrangements were highly 
necessary during this crisis and proved to be an essential part of the response. However, there 
was  no  regional  strategy  among  the  Member  States  affected,  despite  their  evident 
interdependence.  

Political  bilateral  agreements  (e.g.  Bulgaria  and  Serbia  with  Russia)  proved  to  be  less 
effective than market arrangements between gas undertakings within the EU internal market 
framework  in  helping  to  keep  supplies  flowing.  The  deepening  crisis  highlighted  the 
importance of robust and consistent regulation to ensure the adequacy of networks, at both the 
transmission and distributions  levels, to deal with widely  diverging demand  and  supply and 
maintain services.  

Pricing systems appeared to be relatively insensitive to the crisis. Price reactions were almost 
non-existent  in  eastern  Member  States.  This  suggests  a  lack  of  market  functioning  in  these 
regions. However, in other parts of the market, reactions were more dramatic with 10% rises 
on NBP in UK, and a 25% increase at Zeebrugge in Belgium. Direct and indirect subsidies or 
price distortions, either at the public level or through commercial policies, were identified as 
reducing the capacity for markets to deal with supply emergencies by removing incentives for 
investment in new infrastructure and for greater efficiency in energy use9. 

The  crisis  affected  above  all  consumers.  Maintaining  services  to  household  consumers  was 
generally given priority throughout the crisis, although it appears that poorer households were 
most  likely  to  shift  to  alternative  and  inefficient  alternatives  (electricity,  wood-burning, 
particularly in Bulgaria). Where major shortages occurred, industrial customers had to reduce 
demand (e.g. Bulgaria, Romania, Poland's largest fertiliser plant and refinery). Some Member 
States, such as Hungary, Slovakia, issued calls to cut back on gas consumption for industry.  

Beyond  this,  energy  demand  management  policies proved insufficient and largely irrelevant 
due to the need for mid-winter heating and the inefficiencies of district heating systems and 
insulation standards. There was no properly worked out strategy which would have reduced 
energy  demand  more  evenly,  involved  the  whole  economy  and  ensured  that  no  country 

9 

The  Russo-Ukrainian  gas  dispute  of  January  2009:  a  comprehensive  assessment,  Oxford  Institute  for 
Energy Studies, Feb 2009 

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suffered  an  undue  impact  on  its  economy,  and  on  its  environmental  commitments  (e.g. 
heightened emissions from coal plants). 

LESSONS FOR THE EU:  

There is considerable scope to improve the level of preparedness at national and EU level. 

Emergency  planning  was  greatly  hampered  by  a  lack  of  consistency,  coherence  and 
comparability  between  the  various  definitions  and  measures  which  exist  in  the  different 
Member States. Where measures were in place, their effectiveness was curbed by the narrow 
and localised approach to tackling supply difficulties, a lack of options to diversify supplies, 
and  by  a  lack  of  access  to  up-to-date  and  complete  information  on  supply,  storage  and 
demand.  

The  EU  needs  to  have  common  criteria  on  which  Member  States  can  base  their  emergency 
planning, and these need to be developed not just at the national level, but also at a regional 
and EU level with a view to the EU internal market dimension. Reactions based on national 
markets risk hampering the ability of gas traders to keep gas flowing efficiently in the internal 
market and thus exacerbate the situation for the EU as a whole. 

Energy  saving  and  energy  switching  should  be  better  highlighted  within  prevention  and 
emergency plans and seen as a first, rather than a last resort.  

Access to storage is a useful emergency measure, but cannot be relied on for longer periods 
and cannot substitute for better interconnections to keep gas flowing (see also below The EU 
gas market)  

RESPONDING  TO  THE  CRISIS:  THE  FUNCTIONING  OF  THE  EU  GAS  MARKET  AND 

TRANSPARENCY 

Early in the crisis, Europe's gas industry showed its ability to deal with some aspects of the 
European  dimension  of  the  problem.  The  existence  of  trading  agreements  and  supply 
contracts  enabled  companies  to  work  together  to  maintain  supplies  to  domestic  customers, 
schools  and  hospitals,  during  the  coldest  days  of  the  crisis.  For  example,  Russian  gas  was 
made  available  to  Czech  Republic  via  the  Yamal  pipeline,  Czech  gas  storage  was  made 
available to Slovakia, Austrian gas storage to Slovenia. 

New supply contracts between companies emerged during the first days of supply disruption 
(GDF/EON  to  Serbia  and  Bosnia  and  Herzegovina,  ENI  to  Croatia).  Hungary  allowed 
domestic and transit gas to Serbia and Bosnia.  

New  reverse  flows  from  Greece  to  Bulgaria  and  from  Czech  Republic  to  Slovakia  became 
operational after 18th January.  

Cooperation between individual companies (e.g. EON to Hungary) also took place, according 
to  pre-arranged  commitments.  According  to  the  gas  industry10,  "commercial  arrangements 
such as swaps and short term trades allowed a quick response to customers needs".  

10 

Letter from Eurogas to Commissioner Piebalgs, 22 April 2009 

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At least in some of the affected Member States (Germany, Italy and Austria) the markets were 
to  adequate 
to  continue  supplies  without  any  emergency 
able 
interconnections, adequate gas in the system and back-up storage. 

intervention  due 

From the start, the gas industry made significant efforts to deal with the shortages, as well as 
to  cooperate  with  public  authorities.  However,  common  problems  faced  by  many  suppliers 
included:  the  lack  of  alternative  suppliers,  limited  or  non-existent  connections  to  alternative 
supplies,  slowness  of  accessing  gas  from  storage,  few  options  for  fuel-switching  and  high 
levels  of  demand  as  a  result  of  cold  weather.  These  technical  problems  highlighted 
weaknesses  in  the  way  the  internal  market  functions  and  which  call  for  regulatory 
intervention.  

Gazprom,  which  was  now  in  breach  of  its  supply  obligations  to  EU  consumers  which  are 
normally supplied by transit through Ukraine, took some steps to help reduce the extent of the 
disruption  by  increasing  supplies  via  alternative  routes  (notably  through  the  Yamal  and 
Bluestream  pipelines).  Although  limited  (around  12%  of  the  cut),  these  additional  supplies 
replaced some of the missing gas supplies where interconnections existed.  

Norway  also  increased  production  to  help  fill  the  shortfall  in  EU  supplies.  On  6th  January 
2009, gas production in Norway, the EU's second most important source of gas imports, was 
at an all-time high (342mcm/d). This helped to mitigate supply concerns in parts of the EU, 
although  the  additional  supplies  could  not  reach  Eastern  Europe  due  to  the  lack  of 
interconnections, and different standards of gas.  

Two  Norwegian  production  fields  (Kristin  and  Åsgard)  had  to  be  shut  down  from  8th  -12th 
January due to rough weather conditions. This left excess capacity in the Norwegian transport 
system towards the EU. During this period, total deliveries of Norwegian gas amounted, with 
some  exceptions,  to  320-340  mcm/day,  with  a  total  transporting  capacity  of  about  350 
mcm/day.  In  addition,  a  compressor  facility  (B11)  was  out  of  operation,  which  reduced 
flexibility  in  the  overall  export  system.  Bottlenecks  further  downstream  in  German 
infrastructure implied that gas that could have been rerouted to the Continent was instead sent 
to UK despite lower prices.  Importantly, all available gas was routed to the market, but not 
necessarily to the market where prices were the highest.  

Although the UK was not directly affected by the crisis, an attempt was made to help alleviate 
security  concerns  in  continental  European  markets  by  transiting  Norwegian  gas  to  Belgium 
and from there across Europe. 

Despite  reasonable  cooperation  between  gas  companies  to  exchange  data,  limitations  on 
access  to  up-to-date  and  consistent  information  were  an  obstacle  to  making  the  most  of 
market potential. In particular, the market was hampered by inadequate information on cross-
border gas flows and transparent information on the flow of gas into the EU. 

Another obstacle was inadequate coordination between Transmission System Operators, who 
still had a largely national view of their market. This meant that in some cases such as Italy 
with  Slovenia  and  with  Germany,  measures  which  brought  local  relief  placed  neighbours 
under additional strain.  

Events  also  highlighted  shortcomings  in  the  gas  pipeline  network,  on  which  the  internal 
market  is  based.  Additional  supplies  from  the  Netherlands  for  example,  where  domestic 
production  was  increased  in  response  to  the  crisis,  could  not  reach  needy  customers  in 

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Bulgaria  because  the  interconnections  and  same  gas  standards  were  not  there.  Lacking 
infrastructure  also  meant  that  available  LNG  supplies  could  not  be  supplied  to  where  they 
were most needed, particularly from Spain and Greece. 

Lessons for the EU  

The internal market principle, that one part of the market should help supply another at times 
of supply difficulty, proved valuable. 

The gas industry also showed that it can be largely relied on to deal with localised and very 
short  term  interruptions  to  supply.  In  a  wider  or  longer  term  emergency,  or  one  involving 
external  circumstances  beyond  the  control  of  market  players,  political  intervention  or 
coordination is helpful. 

It  was  also  the  case  that  the  market  response  largely  relied  on  existing  obligations  and 
commitments. Concrete scenarios to deal with unexpected risks were lacking.  

Greater  coordination  among  TSO’s  and  better  coordination  of  access  to  pipeline  networks 
could also have ensured that the available gas flowed to the affected areas. This might have 
avoided some of the worst impacts of the disruption. 

While a well-functioning market is beneficial for security of supply, account must be taken of 
the  negative  consequences  which  come  from  weaknesses  in  the  existing  market  framework. 
Weak  markets  and/or  inadequate  regulation  may  not  encourage  spare  capacity  and 
infrastructure or transparency, including in pricing.  

Insufficient  physical  network  integration,  inadequate  transparency  in  network  utilisation,  as 
well  as  inflexibility  in  capacity  reallocation  and  congestion  management,  inadequate  price-
response mechanisms and lack of coordination are all factors which undermine the market’s 
response to a gas supply disruption. These will be at least partly addressed in the new internal 
market  legislation,  but  this  makes  it  all  the  more  important  to  ensure  that  the  legislation  is 
fully implemented and properly regulated. 

Differing understanding of public service obligations across Member States may also make it 
more  difficult  for  the  market  to  respond  in  a  consistent  manner  to  a  crisis.  Again,  the  third 
internal market package should help in this respect. 

Nevertheless,  there  is  a  strong  case  for  stronger  market  regulation  to  tackle  some  of  the 
weaknesses  this  crisis  identified.  The  most  serious  and  most  immediately  apparent  of  these 
was insufficient transparency. But other weaknesses which became apparent included missing 
connections or sustainable alternatives to pipelined gas, the absence of contingency plans, and 
an effective role for consumers (energy demand management).  

Companies are willing to cooperate in a crisis, but to do so they need a clearly defined and 
consistent political framework. This needs to set out clearly what constitutes a crisis, how to 
respond, and the respective role of markets and public authorities.  

There  is  also  a  need  for  a  better  understanding  of  contractual  obligations  among  different 
market players, how adequate they are in an emergency, and whether there is a risk of conflict 
if these come under strain. 

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The  need  for  complete  market  transparency  cannot  be  overemphasised.  The  internal  market 
provisions  on  transparency  may  need  to  be  tailored  in  case  of  a  supply  emergency.  The 
market can only work at its most effective if all market participants have equal access to all 
the available information.  

The question of infrastructure and interconnections is paramount. Markets work better when 
they are fully interconnected and where supply flexibilities are possible (see also below).  

RESPONDING TO THE CRISIS: EU ADDED VALUE 

During the crisis, a localised disruption (in Eastern Europe) grew into a EU-wide shortage of 
gas  supplies  affecting  countries  across  the  EU,  including  for  example  France,  as  well  as 
Netherlands and UK that were actively involved in providing additional supplies. The scale of 
the  gas  supply  disruptions  required  an  adequate  response  at  the  EU  level,  however,  a  clear 
strategy as well as concrete instruments were lacking. 

The  European  Commission,  in  close  coordination  with  the  Council  Presidency,  ensured 
coordination within the EU and facilitated contacts with the interested parties. These efforts 
were  instrumental  in  ensuring  a  common  EU  position  and  speaking  with  a  single  voice  in 
contacts with third partner countries.  

In  addition,  in  order  to  address  the  difficulties  in  access  to  the  relevant  information,  a  fact 
finding  mission  composed  of  representatives  of  the  Commission  and  the  Czech  Presidency 
was deployed to Kiev and Moscow on the 4th January. This was complemented at a later stage 
by  deployment  of  experts  from  the  industry  and  the  European  Commission,  in  cooperation 
with  the  European  Gas  Industry  and  the  European  Gas  Transmission  Operators,  on  the 
Russian and Ukrainian territory for monitoring of gas flows to the EU. 

The European Commission also exchanged valuable information with the Member States on a 
regular  basis  throughout  the  crisis.  This  took  place  mainly  through  the  Gas  Coordination 
Group  (meetings  on  9th  and  19th  January),  through  the  Network  of  Energy  Security 
Correspondents  where  relevant  information  was  disseminated  and  at  the  level  Directors 
General  for  Energy  in  a  meeting  held  on  21st  January.  The  Czech  presidency  held  an 
extraordinary  Energy  council  on  12th  January  where  Russian  and  Ukrainian  Ministers 
attended to provide additional clarifications on their respective positions. 

With respect to third partner countries concerned, namely Russia and Ukraine, the European 
Commission  facilitated  contacts  between  the  parties,  in  order  to  seek  an  adequate  solution 
with the objective of resuming gas supplies to the EU. The high level political contacts that 
took place throughout the crisis were complemented by regular contacts on a technical level 
with the Russian and Ukrainian officials and representatives of Gazprom and Naftogaz. This 
enabled  also  the  above-mentioned  deployment  of  experts  and  facilitated  the  eventual 
resumption of gas supplies to the EU. 

The Commission worked closely with the gas industry throughout the crisis. Regular meetings 
took  place  between  the  Commission  and  Eurogas,  including  a  high  level  meeting  between 
President Barroso and heads of gas companies on 20th January 2009. 

The crisis therefore demonstrated some of the potential benefits of coordination, exchange of 
information and advice between the European Commission, gas industry and Member States 

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which  took  place,  including  at  the  level  of  the  Gas  Coordination  Group  (GCG). 
Representatives of the Energy Community11 were also present at the GCG meetings of 9th and 
19th January, as they were also seriously affected by the crisis. However, it remains the case 
that the provisions of the Gas Security directive were insufficient in order to enable the EU 
and Member States to fully understand the extent and the impact of the crisis.  

In  the  aftermath  of  the  crisis,  the  GCG  members  responded  to  an  ad-hoc  questionnaire 
requiring more detailed data than MS would be obliged to provide under the provisions of the 
Gas Security of Supply Directive. All Member States cooperated and nearly all provided the 
replies. This contributed to being able to assess the situation correctly at an EU level.  

Finally, with respect to the European Parliament, information was provided on a regular basis 
throughout  the  crisis  and  in  its  aftermath  by  Commissioner  Piebalgs  and  the  Czech 
Presidency.  This  included  the  participation  at  plenary  sessions  14  January  and  1  February 
2009,  as  well  speaking  to  the  Conference  of  Presidents  on  8  January.  The  European 
Parliament held a further hearing on this issue on 2nd April 2009. 

Lessons for the EU 

Security of supply clearly needs to be part of a common and coherent energy policy of the EU 
and full consideration needs to be given to the long and short term dimension of security of 
gas  supply.  The  internal  market  dimension  has  to  be  complemented  by  a  strong  external 
relations element.  

Interdependence  in  gas  supply  in  the  EU  has  increased  and  continues  to  do  so.  Within  the 
internal  energy  market,  a  significant  disruption  affecting  one  Member  State  can  quickly 
become  an  issue  for  the  wider  European  market.  Therefore  a  greater  consistency  and 
collaboration  is  needed  across  the  EU,  in  particular  as  regards  the  common  objectives  and 
standards of EU’s security of gas supply. 

Within the EU, the work of the European Commission in terms of coordination and bringing 
together Member States and industry contributed during the January crisis to a more coherent 
action  at  the  EU  level.  The  Gas  Coordination  Group  proved  to  be  a  very  useful  body, 
anticipating and contributing to identifying solutions to gas supply problems at the EU level. 
It  is  also  a  helpful  instrument  to  bring  together  all  interested  parties,  at  the  political  and 
industrial level. The GCG could also have the potential to enhance communication between 
network operators and to coordinate emergency and solidarity measures. 

Consultation, communication and exchange of information are crucial at the European level, 
whether a disruption arises or not in order to ensure a European security of gas supply. It is 
vitally  important  that  the  EU  communicates  with  a  common  voice,  both  at  home  and  when 
speaking with third countries.  

During the January gas crisis, the EU succeeded in maintaining a common approach despite 
the  pressure  from  some  EU  Member  States.  The  cooperation  between  the  European 
Commission  and  the  Czech  Presidency,  with  the  active  support  of  the  Gas  Coordination 
Group,  was  key  in  maintaining  a  strong,  consistent  message  internally  and  underpinned  the 

11 

The  Energy  Community  includes  the  European  union,  Albania,  Bosnia  and  Herzegovina,  Croatia, 
former Yugoslav Republic of Macedonia, Montenegro, Serbia and Kosovo 

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efforts  undertaken  externally  with  Russia  and  Ukraine.  It  facilitated  an  agreement  that 
eventually made possible the resumption of the supplies of gas to the EU.  

Likewise consultation, communication and exchange of information are crucial with supplier 
and transit countries in order to prevent and carefully manage possible problems with respect 
to the EU’s external gas supplies. The initiatives that are already underway, such as within the 
EU-Russia Energy Dialogue, the implementation of the EU-Ukraine energy MoU as well as 
the  ongoing  energy  discussions  with  Belarus  and  Moldova,  should  continue  and  be 
intensified. In this context, the EU needs to insist that international treaties and transit/supply 
agreements  are  respected.  [Where  possible,  relevant  provisions  building  on  the  existing 
frameworks and commitments should be reflected in bilateral agreements.] 

The appointment and prompt dispatching of EU monitors made a useful contribution to better 
understanding  and  identifying  possible  solutions  to  the  problems  in  EU’s  external  gas 
supplies.  A  consideration  should  therefore  be  given  to  providing  the  EU  with  an  adequate 
capacity of experts able to carry out this role.  

The involvement of the Commission, in collaboration with the Council Presidency and with 
the support of the European Parliament and European industry, in speeding a resolution of this 
crisis has important implications for energy relations between the EU and external partners. 
The  strength  of  its  internal  energy  market  and  internal  energy  policy  are  factors  which 
contribute to EU’s credibility externally. 

RESPONDING  TO  THE  CRISIS  –  THE  ADEQUACY  OF  INFRASTRUCTURE  AND  POTENTIAL  FOR 

DIVERSIFICATION 

The  gas  supply  disruption  lasted  a  total  of  14  days.  It  took  almost  as  long  for  emergency 
network  options,  such  as  reverse  flows,  to  be  implemented  where  interconnections  where 
already in place.  

It was assessed that it was mainly the inadequacies in gas transport which constrained flows 
(capacities, reverse flow capabilities, unusual routes, insufficient integration of gas networks 
in  Central  and  South  Eastern  Europe),  not  an  aggregate  shortage  of  gas.  Theoretically,  the 
shortfall  (300mcm  per  day)  could  have  been  fully  compensated  by  increased  imports  from 
alternative  sources  and  withdrawal  from  gas  storage  (available  spare  storage  withdrawal 
capacities at EU level of around 800mcm).  

The Commission has repeatedly warned of the risks to security of supply arising from the lack 
of  adequate  interconnections,  the inadequate  possibilities  for  reverse  flows  and  the  limits  to 
fuel switching which exist in certain parts of the EU market, most recently in the November 
2008  Strategic  Energy  Review.  The  events  of  January  2009  vindicated  these  concerns  and 
highlighted  how  the  lack  of  interconnections  and  diversification  options  (route  and  fuel 
source) can exacerbate a supply crisis.  

As  the  crisis  developed,  the  importance  of  sufficient  infrastructure  and  of  access  to  diverse 
sources  of  supply  became  evident.  Countries  which  coped  best  were  able  to  take  up  other 
options very quickly, e.g. more frequent Liquefied Natural Gas deliveries in Greece, Italy and 
France, increased import via Yamal and Norway for Poland, Czech Republic and Germany, 
additional supplies from Libya to Italy, more cross border trade within the EU, for example, 
from Austria to Hungary.  

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The  most  seriously  affected  Member  State,  Bulgaria,  had  no  other  import  options,  no  other 
gas supply option such as LNG and no option to increase domestic gas supply.  

Access  to  additional  domestic  gas  production  was  limited.  In  those  countries  which  were 
affected with domestic gas resources (Romania, Hungary, Italy and Poland), there was limited 
scope  to  increase  production.  The  other  main  producers,  UK  and  Netherlands,  were  better 
able  to  increase  supplies,  and  both  increased  their  gas  transport  towards  the  affected  area. 
However, this gas failed to reach the most affected areas due to missing pipeline links.  

Investment  in  alternative  gas  supplies  paid  off  for  those  Member  States  who  had  already 
pursued a policy of supply diversification. Slovenia for example was able to compensate for 
Russian supplies as it only imports 50% of its gas from Russia, and more than one third from 
Algeria. Czech Republic, Austria and Hungary were also able to compensate by Norwegian 
gas imports via Germany.  

Reverse  flow  proved  a  problematic  option  at  the  time  and  came  too  late  to  make  a  real 
difference,  particularly  in  Bulgaria.  However,  had  the  crisis  persisted,  the  role  of  reverse 
flows  might  have  been  significant.  On  18  January,  Slovakia,  together  with  RWE  Transgas 
(the Czech Republic TSO), reversed the flow on the main East-West transit pipeline. The next 
day,  one  day  before  the  resumption  of  Russian  supplies  via  Ukraine,  Greece  reversed  gas 
pipeline  flows  to  Bulgaria.  The  fact  this  was  possible  is  a  promising  development  for  the 
future. 

Those  Member  States  where  gas  is  an  important  fuel  for  electricity  generation  faced 
additional  difficulties.  In  Slovakia,  the  cut  in  gas  supplies  from  Russia  put  the  electricity 
system under severe strain. The situation was eased by the provision of additional gas from 
within the EU. In Germany, demand for lignite for power production increased such that the 
industry had difficulty to cope with demand. In Bulgaria, there was pressure to reopen nuclear 
reactors at Kozloduy. Likewise, Slovakia considered the possibility of reopening the nuclear 
reactor at Bohunice in Slovakia in response to the gas crisis.  

Lessons for the EU 

The  crisis  confirmed  that  the  EU  needs  to  diversify  its  supplies  in  terms  of  supply  source, 
supplier, transit route and fuel form (natural gas or LNG). It also highlighted the benefits of 
diversifying energy sources towards indigenous fuels, providing these are also sustainable and 
competitive.  

A  more  interconnected  market,  more  flexibility  in  gas  transport  and  more  fuel-switching 
options can also help mitigate the risks of a significant reliance of a single supplier. 

Reverse  flow  was  recognised  as  potentially  powerful  tool  for  mitigating  the  effects  of 
disruptions to supply. However, more investment in the relevant infrastructures are needed to 
ensure  that  this  possibility  exists  across  the  EU’s  internal  market.  The  GIE  task  force  to 
examine reverse flow options set up in February 2009 is a timely development. 

Access  to  gas  storage  is  useful  fall-back  where  gas  flows  are  restricted.  Development  of 
commercial  storage  is  a  positive  step  where  this  is  attractive  technically,  economically  and 
geographically. Ongoing investment in new storage sites confirms that storage is an option of 
growing interest to the gas sector.  

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The importance of a stable regulatory framework to encourage urgently needed investment in 
infrastructure and interconnections was also confirmed. 

The  crisis  confirmed  the  political  and  economic  reasons  for  greater  diversification  of  gas 
supply, particularly in Central and Eastern Europe. However, it also illustrated the barriers to 
investment  in  major  new  infrastructure  projects:  as  long  as  the  cost  to  industry  of  the 
disruption  is  limited,  as  was  the  case  in  January  2009,  the  commercial  justification  for 
additional capacity for the worst case scenario remains weak.  

The importance of a speedy agreement on criteria for the new 10-year network development 
plans  by  ENTSO-gas  and  regulators  became  evident.  The  experiences  of  January  2009 
suggest that these will need to take full account of security of supply as a public good, and 
scenarios  for  crisis  prevention  and  mitigation.  Both  short  term  and  longer  term  solutions 
should be considered. The aim should also be for heightened cooperation between regulators 
and TSO's in Member States when developing and implementing infrastructure plans with a 
view to improved cross-border measures and greater reverse flow capacities.  

The  EU  needs  to  consider  ways  of  making  investment  in  infrastructure  more  attractive  in 
Eastern Europe. One way might be via the New Europe Transmission System (NETS) project 
to integrate gas transmission systems operators across central and eastern Europe.  

This  situation  requires  longer  term  planning  and  investment.  The  measures  included  in  the 
Economic  Recovery  Plan  and  Strategic  Energy  Review  (e.g.  Baltic  Energy  Market  and 
Interconnection  Plan,  interconnections  in  central  and  south  eastern  Europe,  the  Southern 
Corridor  as  well  as  an  LNG  strategy)  and  the  new  provisions  to  oblige  the  new  ENTSO  to 
develop  10-year  plans,  will  help  address  these  shortcomings.  The  Commission's  initiative, 
presented  in  the  second  Strategic  Energy  Review,  to  develop  a  new  Energy  Security  and 
Infrastructure Instrument is also relevant.  

An  important  element  which  has  been  greatly  overlooked  as  a  tool  in  preventing  and 
alleviating  crises  is  energy  efficiency.  Greater  energy  efficiency  across  the  whole  energy 
spectrum, and a more efficient use of gas in all its processes (water and space heating, power 
generation) is needed to enable the EU to do more with the gas which it has. 

CONCLUSIONS 

A repeat of the January 2009 gas supply crisis, from a similar or different cause, can not be 
ruled out.  

The  Commission’s  concerns  that  the  EU  energy  security  strategy  must  be  strengthened  are 
therefore completely vindicated.  

The  crisis  highlighted  weaknesses  in  each  stage  of  the  gas  supply  security  approach  at  EU 
level:  

–  The  early  warning  mechanisms  at  national  and  EU  level  are  inadequate.  Early  warning 
mechanisms  within  the  EU  as  well  as  with  supplier  and  transit  countries  should  be 
strengthened  or  put  in  place.  They  should  be  underpinned  by  appropriate  bilateral  and 
multilateral agreements with the EU’s gas supplier and transit countries, including energy 

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provisions,  building  where  possible  on  the  relevant  existing  frameworks  and  provisions, 
such as within the WTO and Energy Charter. 

–  Emergency  planning  needs  to  be  made  more  consistent  and  coherent  among  Member 

States, with common standards and coordinated responses;  

–  The new internal energy market legislation should be implemented as quickly as possible 
in order to address weaknesses in market functioning which undermine security of supply 
and limit the ability of the market to deal with supply threats and disruptions;  

–  Greater transparency and easier access to market information is necessary in order to assess 

the supply situation wisely and taken necessary preventive and remedial action;  

–  The lack of interconnections and the physical isolation, in energy terms, of some Member 

States, proved to be a real impediment to dealing with a supply crisis.  

The  crisis  also  confirmed  the  importance  of  certain  principles  of  EU  energy  policy  which 
deserve to be strengthened:  

–  As  far  as  possible,  the  market  should  be  able  to  manage  risks  and  crisis  situations. 
However, this requires the regulatory framework to be adequately robust. There also has to 
be room for political intervention should this be necessary;  

–  A national energy supply crisis quickly becomes a European issue; conversely, European 
intervention  can  work  more  effectively  than  individual  national  reactions  and  ensure 
security of gas supply across the EU.  

–  Political solidarity in the EU is vital both in domestic responses, to ensure that the market 

can work properly, and in dealing with external partners; 

–  The importance of demand side management as an important energy security tool, as it was 
conspicuously  absent  from  most  reactions.  Any  emergency  response  must  also  focus  on 
ways  of  reducing  energy  demand  and  diverting  demand  towards  other  low-carbon  fuels 
and  technologies.  This  also  has to  be  fully  incorporated  into  any  longer  term  strategy  on 
energy supply security; 

-  Effective  and  transparent  coordination  at  the  EU  levels  at  the  political,  commercial, 
regulatory, and network level is key to resolving a crisis with EU implications; 

The crisis also served as a wake-up call to policy makers to strengthen their energy strategies:  

–  Growing dependence on gas for electricity and domestic heating, with limited options for 
fuel-switching,  further  increases  the  risk  that  a  gas  supply  crisis  will  have  a  deeply 
damaging economic impact; 

–  Likewise,  the  dependence  of  parts  of  the  EU  on  a  single  supplier  or  a  single  source  is  a 
major  concern  to  consumers  across  the  EU  and  calls  for  new  efforts  to  increase  supply 
diversification in supplier, supply route and supply source.  

The crisis also confirmed the benefits of EU collaboration:  

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–  The  central  role  of  the  Commission  as  information  gatherer,  mediator  and  monitor,  in 
collaboration  with  the  Council  Presidency  and  supported  by  the  European  Parliament, 
proved fundamental to facilitating a solution.  

–  The value of the Gas Coordination Group in terms of coordination and development of a 
coherent  internal  approach  was  fully  demonstrated.  The  contribution  of  the  Network  of 
Energy  Security  Correspondents,  bringing  together  the  representatives  of  Ministries  of 
Foreign  Affairs  and  Ministries  of  Energy,  involved  a  useful  exchange  of  the  available 
information. Participation of the third partner countries concerned (Russia, Ukraine as well 
as Energy Community countries) on an ad hoc basis in these discussions also provided a 
positive feedback. 

The  events  of  January  2009  confirmed  the  importance  of  having  emergency  plans  and 
measures in place at a national level, the need to improve the Community dimension and the 
added value of a coherent EU approach to the EU’s external energy security. The disruption 
of supplies affected a large number of Member States and the ad-hoc measures facilitated at a 
Community level did help to mitigate somewhat the major economic impact the dispute had 
on  some  EU  Member  States.  Clearly  there  is  a  need  to  formalise  these  arrangements  and 
ensure that the Community is better placed to face such situations in the future.  

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1. Situation in Ukraine before the gas cut with flows of 31 December 2008 

ANNEX  

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Source: Gas Coordination Group, DG TREN 

2. Picture: Situation in Ukraine after the gas cut with flows of 1 January 2009 

The red boxes indicate the drop in gas flow to Ukraine after the cut. The volume of lost gas is under the name of affected entry points from Russia to 
Ukraine.  

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Source: Gas Coordination Group, DG TREN 

3. Picture: Situation in Ukraine after the gas cut to EU on 7 January 2009 at midnight 

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Source: Gas Coordination Group, DG TREN 

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4. Picture: Main responses in Europe during the period of gas cut (from 7 to 20 January 2009) 

Source: Analysis of gas crisis presented to Gas Coordination Group by IEA 

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