Merkel, Putin hold "intense" talks on energy, Iran
Thu Apr 27, 2006 3:52 AM ET
By Louis Charbonneau

TOMSK, Russia, April 27 (Reuters) - German Chancellor Angela Merkel and Russian President Vladimir Putin met in the heart of Siberia on Thursday to discuss the security of gas supply to Europe and to try to agree on a strategy for dealing with Iran.

Germany and Russia, already partners in a project to build a Baltic undersea pipeline to export Siberian gas, struck deals to fill the pipe with gas and give state-controlled gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research) greater access to European consumers.

The agreements came as Gazprom, a former Soviet ministry which has be transformed by booming energy prices into the world's fourth largest listed company, makes an aggressive push to add further value by expanding into European markets.

German chemicals firm BASF (BASF.DE: Quote, Profile, Research) and Gazprom agreed an asset swap deal that includes the right of BASF to help develop the large Yuzhno-Russkoye gas field in Siberia, and in return boost Gazprom's stake in their gas distribution joint venture.

"The agreement we have just signed demonstrates that Russia and Germany are able to build upon one another. It contributes to the further development of a stable and reliable partnership between Gazprom and BASF," said Hambrecht.

But Merkel's visit failed to break the deadlock between Gazprom and Germany utility E.ON (EONG.DE: Quote, Profile, Research), which are trying to agree terms for the latter's entry into the three-way venture with BASF to develop Yuzhno-Russkoye.

 

INTENSE DISCUSSIONS

"Our first discussions were unusually intense," Putin told reporters on Wednesday evening after a meeting with Merkel on economic and energy ties between Berlin and Moscow, the focus of Merkel's two-day visit to Tomsk in western Siberia.

Merkel said they did not discuss foreign policy issues, though members of Germany's large delegation of 10 ministers and 20 representatives from top German firms said the two leaders tackled those issues at a dinner meeting afterwards.

The main foreign policy issue discussed over dinner was Iran, which has only one day left to comply with a U.N. Security Council deadline to freeze its uranium enrichment programme and provide the International Atomic Energy Agency (IAEA) with answers about its past nuclear activities.

The West believes Tehran is secretly producing atomic weapons. Iran says its programme is aimed solely at generating electricity but refuses to abandon nuclear enrichment activities that could enable it to produce fuel for atomic weapons.

Putin has made it clear that the veto-wielding permanent council members Russia and China oppose the idea of economic sanctions against Iran.

But Merkel hopes to persuade Putin that if Russian attempts to get Iran to compromise and suspend its uranium enrichment programme fail, Moscow would not stand in the way of sanctions intended to force a peaceful resolution of the crisis.    

© Reuters 2006. All Rights Reserved.