Skip to main content

Irish gas supply not at risk from Ukraine crisis, says Bord Gáis

By: 
Mark Paul - Irish Times

War could inflate prices but gas from Qatar and Norway would ensure supply

Bord Gáis has played down the potential effect that the Ukraine crisis could have on Ireland’s winter gas supplies, after Russia last week warned there is a “high risk” of disruption to the supply of its gas to Europe delivered via the war-torn country.

Alexander Novak, the Russian energy minister, made the comments against the backdrop of a sharp ratcheting up of tensions between his administration and the European Union, as well as separate tensions between Russia and Ukraine over gas prices.

Mr Novak said gas supplies in Ukraine were running critically low and claimed that if it experiences a cold winter, Ukraine could siphon off gas intended for Europe that flows through pipelines on its territory. About 15 per cent of Europe’s gas is delivered via this route.

“The situation is extremely critical as the heating season approaches,” Mr Novak said. “There is a high risk that [gas intended] for Europe will be illegally taken by Ukraine for its own use.”

Ukraine said his comments are “groundless” and meant to discredit the country, which as well as being on the brink of all-out war with its larger neighbour, is involved in a $5 billion (€3.8 billion) pricing dispute with it over allegations by Russia that Ukraine owes money to Russia’s Gazprom.

John Heffernan, a senior gas and power trader for Bord Gáis, said that if all-out war breaks out between Ukraine and Russia, it would likely mean an increase in wholesale gas prices. But he said that most of the gas that is imported into Ireland does not originate in Russia.

Gas sources

Ireland, he said, imports most of its gas via two interconnectors with Britain. Supplies there are currently plentiful, he said, because of the knock-on effect of good weather conditions elsewhere in the world.

 

“The UK does not actually get most of its gas reserves from Russia. It gets most of its gas from Qatar, Norway and its own continental shelf,” said Mr Heffernan. He said Asian countries normally pay Qatar higher prices for gas than Europe, but mild weather in Asia has reduced demand.

“So, a lot of gas from Qatar that would normally be sold to Asia has instead been sent to Europe and the UK, boosting reserves,” he said.

Mr Heffernan said the worst case scenario for Ireland this winter would involve all-out war between Russian and Ukraine that knocked out supply, a reduction in gas from Qatar, and cold weather across Europe. “That would result in an escalation in wholesale prices.”

He said the Corrib project off the west coast, which is due onstream next year, would further ensure the stability of supply, though it would likely not result in a reduction in prices.

Posted Date: 
2 September 2014