"There is no question of diminishing the dependence that Europe
has on Russian gas - why should we even be discussing this?"
Alexander Medvedev, deputy chairman of Gazprom, asked on May 26. But
memories of the interruption to Russian natural gas supplies to
Europe at the beginning of the year inevitably color the
relationship.
"Such administrative measures of the EU - not based on underlying
understanding of the European gas market - could contribute to
undermining the stability of the gas markets." - Alexander
Medvedev, deputy chairman, Gazprom.
Russian gas monopoly
Gazprom is planning to
supply 151 billion cubic meters of natural gas to Europe in 2006, up
from 147 Bcm in 2005, deputy chairman Medvedev said, "without using
central Asian gas." Speaking to a Eurogas conference in Berlin
recently, he stressed: "We are absolutely certain that we will be
able to meet our commitments."
Medvedev was referring to the days in early January when record
cold weather coincided with a stand-off in the difficult gas
supply/transit relationship between Russia and transit country
Ukraine.
This meant that when Gazprom cut off supply to Ukraine, briefly,
the reverberations ran through all its longstanding gas customers in
central and western Europe right to the shores of the North Sea.
Though this was the first interruption in some 40 years to
Russian deliveries to
Europe, supplies
continued to be reduced during the rest of January. For example, in
Italy, one of the hardest hit Gazprom customers, strategic gas
stocks were depleted and emergency demand side measures were called
for by the government.
Though volumes to Europe were quickly returned to normal --
partly through a deal by Russia to supply gas to Ukraine sourced
from the central Asian republics -- the legacy of this long-feared
interruption has been loud and frequently repeated calls, by
companies, countries and official organizations including the
European Union, for diversification of Europe's supply.
Russia, and specifically Gazprom chief executive Alexei Miller,
have reacted to this by officially noting Gazprom's growing interest
in the markets of the US and southeast Asia. Some western
commentators have interpreted this as a thinly veiled threat to
customers in Europe, something which Medvedev apparently finds
highly offensive.
The conference at which Medvedev was speaking - Energy Dialog
Russia-European Union: Gas Aspects - was organized by Eurogas, the
European natural gas industry group, and many of Medvedev's remarks
were aimed at the European Union. Also on the speakers panel were
Christian Cleutinx, director, EU directorate general for transport
and energy, and Eurogas secretary general Jean-Marie Devos.
It was clear at the conference that the preoccupations of the two
sides, Europe and Russia, customers and supplier, were different:
security of supply as against security of demand. However, as
Cleutinx observed, at the beginning of his remarks, "security
of supply and security of demand are two sides of the
same coin."
"It is necessary to get away from the rhetoric and look at the
current problem that we have," Medvedev said. He attacked what he
called the EU's "attempts to undermine long-term contracts."
Gas-release programs in Europe had caused new market players to
emerge that "don't consider the long-term development of the market"
and have "only short-term goals, he said."
Medvedev also slammed the EU's "interference in market activities
of companies," which made it possible "to create excess in one area
and surplus in another."
He cited the recent shortage of winter gas in the UK when there
was a surplus in Europe as an example. He said the actions of
Germany's Kartellamt (antitrust office) were "a particular example
of interference in contract terms for E.ON Ruhrgas," where "valid
contracts were undermined and banned."
"Looking at what the EU authorities did, we [Gazprom] see no
grounds for optimism," he went on. "Such administrative measures of
the EU - not based on underlying understanding of the European gas
market - could contribute to undermining the
stability of the gas
markets."
Medvedev called for demand reliability for suppliers to the
European market and attacked "artificial impediments that might
hinder our infrastructure development or our policy over [using]
it."
He spoke of the North Europe Gas Pipeline project, which is
planned to supply gas to Germany and, through the Balgzand-Bacton
Line, on to the UK, "which is a very important market". In a
reference to EU policy on third party access to infrastructure,
Medvedev said: "It is very important [for Gazprom] to have an
exemption" for the NEGP project from the EU's TPA requirements for
gas pipelines.
The EU's Cleutinx had earlier called for "access to markets [in
both Russia and Europe] on a reciprocal basis" and told the
conference that he "must insist on equal access to transit and TPA
in Russia," as a statement of the EU's position.
Updated: June 13, 2006
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