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UtILIty WEEK | 9th - 15th May 2014 | 25 Markets & Trading progress seems to be made," Marzec-Manser says. In the first weekend of March, Ukraine's interim prime minister, Arseniy Yatsenyuk, told reporters that Russia had effectively declared war with a parliamentary vote approving president Valdimir Putin's request to use force in Ukraine to protect Russian interests. Icis reports a Friday closing price of 64.95p/th and a Monday close of 69.35p/th following a 6 per cent hike over the day. Marzec-Manser says that when a "reverse flow" supply agreement between Ukraine and Slovakia was agreed at the end of April, Icis saw the winter price fall from 65.10p/th to 64.25p/th, day on day. Although not insignificant, Ukraine has diminishing importance as a gas transit route for Russian supplies. The greater diver- sity of transit routes is a result of a conscious drive on the part of European countries to build more links following severe disruption in 2009, which was also prompted by ten- sions between the two nations. "The EU walked away from the 2009 event saying that there definitely needs to be greater interconnection within Europe to help reduce risk to security of supply, and there has been a lot of investment in that since then," Marzec-Manser says. A recent report from the Oxford Insti- tute for Energy Studies (OIES) investigating the impact of the Ukraine crisis notes that Europe's gas markets have less exposure to the risk of supply disruption because of the recent additions of Russian gas pipelines that skirt the borders of Ukraine en route to Europe. "Because Russia supplies about 30 per cent of Europe's natural gas and more than half of these volumes are still transported via Ukraine, issues of European gas security are raised," the OIES says, "but Europe is in a better position to handle a potential disrup- tion than it was on previous occasions." Before the building of new pipelines, Ukraine was responsible for the transit of 80 per cent of Russia's gas supply to Europe, but this has been reduced to 50 per cent aer the completion in 2012 of the Nord Stream pipeline, which carries gas from Russia to Germany via the Baltic Sea. Also relieving pressure on Ukraine is the Yamal-Europe pipeline, which carries gas from Russia to Germany via Belrus and Poland. The OIES says much of the gas transiting Ukraine is destined for Italy – with supplies also going to Austria, Hungary, Bulgaria, Greece, former Yugoslavia and Turkey – meaning southeast Europe has the greatest exposure to risk. "On the other hand these countries are in a somewhat better position compared with previous crises due to investments in new interconnectors and the adaption of exist- ing pipelines able to work in a reverse-flow mode, typically from the Nord Stream pipe- line in Germany down to Eastern Europe," the report adds. "There's a relaxed feeling in the market that we might get by until autumn," said senior gas editor William Powell in a webinar for market data provider Platts. "Of course, there might then be very dif- ferent fundamentals confronting the market. One shouldn't be too complacent about this," Powell added, pointing to the Dutch govern- ment's recent decision to cut its domestic gas production with immediate effect. Gas supplier Gasterra will have to meets it con- tractual obligations through spot deliveries bought through the wholesale market, boost- ing demand. Marzec-Manser says the impact of the Dutch production cut may already be reflected in wholesale market prices for gas, but agrees that near-term confidence could be shaken come the latter part of winter 2014-15. "People are definitely relaxed about the supply picture through to the end of the cal- endar year. But it's the end of winter – aer storage stocks have already been depleted to some extent – that concerns over supply can arise," he says . Europe's gas market players may well take comfort from current supply flexibility, but for a fair fight between bulls and bears 2014 may be too soon to tell. Russian gas transport through Ukraine to European countries (bcm) 2013 2014 Italy 25.33 15.08 Turkey 13.00 14.02 Germany 11.71 21.00 Czech Republic 7.32 7.28 Hungary 6.00 5.29 Slovakia 5.42 4.19 Austria 5.23 5.22 France 3.21 3.04 Bulgaria 2.76 2.53 Greece 2.63 2.50 Romania 1.19 2.17 Serbia 1.16 0.74 Slovenia 0.54 0.50 Switzerland 0.37 0.30 Bosnia-Herzegovina 0.19 0.26 Macedonia 0.04 0.08 Total 86.10 84.20 Source: Oxford Institute for Energy Studies GAS flowS THRouGH, AND ARouND, ukRAINE Source: Gazprom Source: Gazprom Nord Stream Yamal Nord Stream Gas pipelines planned Existing gas pipelines Territorial sea boundary Yamal - Europe pipeline Gas pipelines Compressor stations Germany Germany Poland Poland Ukraine Czech Rep. Lithuania Lithuania Belarus Belarus Latvia Latvia Estonia Estonia Russia Russia Finland Baltic Sea Sweden Sweden Demmark Demmark North Sea