Temperatures in continental Europe plummeted in the first week of the year.  Some areas of Germany were at -25 below so it was not a good time for Ukraine and Russia to repeat the supplier/customer dispute which shut down gas supply to parts of Europe two years ago.  Each side blames the other, but it seems, as best we can guage, that Russia is simply demanding a price closer to  prevailing European prices which, unfortunately for the virtually insolvent Ukraine, is way too high for its budget. As of Jan 8 the dispute ratcheted d up into something more serious when Russia turned off the tap to four major pipes which pass through Ukraine and on to Austria to the west and Slovakia to the east. 

In far off Oz this may seem all but irrelevant, but in reality is very relevant to some of our more value leveraged energy listings. Indirectly it also helps to explain why BG was so keen to buy coal seam gas acreage in Queensland last year and why Conoco-Phillips slapped down a gazumping price for half Origin's coal seam gas assets (see Orign below, October). To be blunt, we now see Europe at the early stages of what may become energy wars. At present Austria, Slovakia and other states have gas in storage which will last for a month or so, but this is mid-winter and gas is required not only to heat homes but power factories and office towers. 

In the long term Australian energy companies ranging from Woodside, Oil Search and the large and small coal seam gas companies will be obvious beneficiaries when we build expensive LNG export terminals to supply global customers, but in the mid- term there are at least two small-fry local listings which are Johnny's on the spot.  One is targeting 8-9 Trillion feet of coal seam and coal mine gas, the other is building fuel cells which will improve the energy efficiency of Europe