01-11-06

European Commissioner for Energy Andris Piebalgs lashed out against Russia’s energy strategy speaking at the International Energy Week in Moscow. He said the plan is unable to satisfy growing energy consumption in Europe.
Russian Industry and Energy Minister Viktor Khristenko said in response that Russia had been taking “consistent steps” in this field.

EU Commissioner Andris Piebalgs underscored long before his visit that talks in Moscow would focus on adjusting positions of the parties on drafting an energy agreement between the European Union and Russia. The blueprint is expected to be adopted at an EU summit in Berlin in the early 2007. It is most likely to be included in a package of agreements which will replace the expiring EU-Russia cooperation agreement.
Piebalgs and his Russian partners (Energy and Economic Development Ministries) demonstrated their stances in the bargaining, speaking at the International Energy Week. The opinions were expectedly contrasting.

Andris Piebalgs was the first major EU official to confirm Europe’s displeasure with Russia’s ongoing energy strategy.
“The energy strategy of Russia is not fully aimed to transport energy resources to meet the growing consumption,” the European Commissioner said. He added that an increase in investments in the energy industry is critically important to satisfy the growing demand on Russian oil and gas in Europe. Stable running of businesses is the chief condition for securing investment from the EU, the official noted.

Piebalgs was quoted as saying that “monopolist positions” of Russian companies hamper the reverse process -- Russian companies’ investing in European assets in the energy industry, especially downstream such as fuel processing and gas, oil products and energy distribution.
“The EU has strict competition rules,” the European Commissioner said. “The monopolist position of Russian companies in upstream does not act to their advantage. Piebalgs was saying that the European Commission would be endorsing sale deals for processing or distribution facilities in the EU if “Russian monopolies change their status.” Gazprom and Rosneft are major contenders for European downstream assets.

Industry and Energy Minister Viktor Khristenko voiced Russia’s position in this issue at the conference. He said the last two years were “years of consistent steps” for Russia’s energy and fuel industry.
He also reminded -- apparently in a response to the EU’s claims that Russia drags on energy reforms -- that Russia has fulfilled all earlier declared plans on time. He mentioned liberalization of Gazprom’s stocks, Rosneft’s IPO and enlargement, creation of national programs on developing deposits in Eastern Siberia and the shelf and designing the Eastern Oil Pipeline (which the EU has nothing to do with, though).

The aforementioned “consistent steps” make up the real energy strategy of Russia. The minister stated that it was well-thought and would be carried on later. Economic Development and Trade Minister German Gref focused attention on Gazprom and problems of the growing domestic demand on gas.
The parties are coming closer to a new agreement with quite contrasting positions. EU’s chief Jose Barroso said at a conference in Lisbon that EU nations need unity in shaping a position on energy issues in the EU.

Russia has been making a number of statements on concluding a separatist energy agreement with Germany and sending resources of the Shtokman deposit there. Andris Piebalgs made it clear that the European Commission does not mind it.
“It is important to use the Shtokman deposit to meet the European demand,” he said. Apparently, there are opportunities for trade-offs in the Russian-EU energy agreement.