Sunday, January 25, 2009

Russia-Ukraine Natural Gas Conflict: A Personal Experience

Having recently traveled to Eastern Europe over this past Christmas break, I was able to experience first hand the natural gas crisis between Russia and the Ukraine. During my short internship for Hungarian Horizon Energy (HHE), I was able to observe first hand how such a large energy dispute could affect so many professionally and personally. Experiencing this energy crisis during my internship/ vacation gave me new perspectives of how energy is perceived elsewhere in the world.

Personally, it was interesting to see how the local economy and habitants of Budapest responded to the shortage of natural gas. During one of Europe’s coldest periods in the last decade (around 5-10 degrees Celsius), heat for all of Europe’s citizens was a very serious concern. Everyday on television I was bombarded with images of less prepared countries’ citizens inside their homes shivering in their fur coats and huddled by a wood burning furnace, while a cloud of their breath appeared as they spoke to the news reporter. Some smaller countries such as neighboring Slovakia suffered greatly from their lack of federal gas reserves. Budapest residents responded to Slovakia’s need when local and federal government asked home-owners to lower their thermostats by 2-3 degrees Celsius in order to preserve federal gas reserves and aid other countries. After understanding the greater affect of the gas shortage around Europe, it was hard to complain about the colder than usual hotel room I was staying in, or the discontinued use of our heated pool.

Professionally, I learned of the long time governmental contracts Hungary has with Russian energy sources. Because of these long-term contracts many other energy sources in Hungary suffer from a lack of need or interest. Over 60% of Hungary’s energy needs are serviced from Russia. Most Hungarians don’t even know the abundance of natural energy resources their own country could provide them. Hungarian energy companies such as HHE are forced to find other markets for their natural gas because of the lack of homeland needs. This often leads to a higher cost of HHE’s products because of added transportation costs and makes them less competitive in other markets.

1 comment:

abhishek gaurav said...

It will be great if you can also reflect on the politics of the region. It will help us understand the role Energy plays in influencing the politics of the region. The politics of the region is always very shady and nobody seems to know the truth. I guess you spent some time there, you might know more than the biased articles they write in newspapers.