Almost half of energy industry executives still consider Russia to be the most reliable supplier of gas to the European Union, despite OAO Gazprom's (GAZP.RS) cut in gas supplies to Ukraine this week.
In a poll of around 700 oil, gas and power industry executives at the Flame conference in Amsterdam Tuesday, 46.7% of those polled said Russia will be the most reliable source of gas for the E.U. in the next five years. This was double the next most reliable source in the poll, seaborne imports of liquefied natural gas.
Gazprom cut gas supplies to Ukraine by at least 25% Monday in a dispute over payment for previous supplies and threatened further cuts Tuesday. Ukraine is the most important transport corridor for Russian gas imports to Europe and although supplies into the E.U. have not been affected by the cut, the move has heightened concerns over energy supply security.
A similar dispute and supply cut in the winter of 2006 did result in a brief gas supply disruption to some parts of southern and central Europe.
Despite this, several industry executives said the reliability of Russian gas supplies to Europe was not a great concern.
"The political situation is not brilliant in this moment, but we lived in more difficult times in the past," said Carlo Riccardo Meriggi, Vice President of Gas Activities at Italian energy giant Eni SpA (E). "Most our big (gas) contracts with Russia were signed in the Cold War," he added.
"Security of supply doesn't keep me, as a consumer, awake a single minute at night," said Steinar Solheim, Head of Energy Sourcing at Norwegian fertilizer manufacturer Yara International (YAR.OS). He said the lack of competition in the gas market on continental Europe was much more of a concern to a large buyer of gas like Yara, for whom natural gas accounts for 70-80% of costs. He welcomed moves from Gazprom and Algerian state energy company Sonatrach to move into European retail gas markets because it increases competition.
Francois Debien, Vice President of Market Expertise and France's Total SA (TOT) said the best way to mend relations between the E.U. and Russia over energy supply is for companies to develop joint projects with Gazprom to provide Europe with gas, as Total is doing on the Shtokman development.