Gas problems

Very rightly, Alex Tranter, chairman of Enemalta, informed the public that our country should not face shortages because of the Russian decision to cut gas provisions to the Ukraine. But when there is a world shortage of any commodity all countries are likely to be hit. In fact, the chairman qualified his statement when he declared that "gas supplies are not under threat - at least for the time being". So, in a way, we are in the same boat as other countries even though our needs are relatively small.

Interestingly, oil and gas prices did not soar as they did last year because of supply disruptions coming about as a result of hurricanes that wrought havoc and sent tremors throughout the industrialised world. This time round it is a question of politics between Russia, which owns the world's largest natural gas reserves, and the Ukraine, once a satellite of the Soviet Union, which gets about 30 per cent of its gas needs from Russia.

Russia supplied natural gas to the Ukraine and, in fact, to other former Soviet states, at prices well below market rates. Now the political scene has rapidly changed. The three Baltic states - Estonia, Latvia and Lithuania - are EU members. The Ukraine has replaced the President who used to look favourably to Russian interests by Viktor Yushchenko who is more inclined towards pro-West governments.

This led Russia to change its economic tune. Whilst pro-Russian Belarus pays $46 per 1,000 cubic metres of natural gas, the rates for the three EU Baltic states have been raised to $120. With respect to the Ukraine, Russia had two objectives: to apply market rates to the Ukraine as well and to have greater control over gas transportation. Taking these two aspects into consideration, Russia demanded $230 per 1,000 cubic metres of natural gas.

As the Ukraine perceived those rates to be exorbitant and refused to pay, Russia cut off all supplies; its action, however, affected Western Europe. It should be recalled that about 25 per cent of Western Europe's gas supplies comes from Russia through a pipeline passing through the Ukraine. It is observed that, as a result, supplies of Russian gas to Italy and France fell by between 25 per cent and 30 per cent.

Luckily, the dispute between Russia and the Ukraine lasted only a few days, thanks to the sterling services provided by a Russian-Swiss trading company that acted as an intermediary. The compromise reached allows Russia to get the price it wants solely for natural gas for five years and the Ukraine will have to pay double the price it used to pay, but not the full price Russia wanted. The agreement also eliminates the possibility of supply disruption for Western Europe.

The dispute brought to the fore other considerations. Russia used to be considered as the most reliable supplier of natural gas to Europe. That perception is now questionable. Iran and tiny Qatar are ranked second and third. It is really debatable whether Europe could put its mind at rest in terms of its gas requirements.

To support his call for people to put their minds at rest, Mr Tranter declared that Malta obtains its gas supplies by means of sea-going vessels, that Enemalta buys gas on contract from the French giant Total and that the volume bought is negligible when compared to other countries.

The fact that the dispute was not prolonged benefits all countries.

Yet, the urge for alternative sources of energy should be greater. Malta, being a member of the EU, must make its presence felt in the corridors of EU powers in order to ensure that a fully-fledged programme be prepared so that energy needs are not jeopardised by individual suppliers.