Global Economics

EU, Russia Still Tense Over Energy


The pleasant facade on energy at the G8 summit in St Petersburg showed cracks on Monday (17 July) as Russian leader Vladimir Putin indicated the EU is playing an unfair game in its push for Russian ratification of the Energy Charter Treaty.

"Energy is today the heart and core of our economy and we would like our partners to give us access to the heart and core of their economy, but we encounter, time and again, obstacles on the transfer of high technology," he said.

"Where do they [the EU] offer production infrastructure on their side? I don't mean individual pipelines, I mean trunk pipelines with a large diameter," the president added in stern tones. "We don't get anything in return."

The Energy Charter Treaty is a multilateral deal on energy cooperation signed in 1994, but without Russian ratification of a so-called "transit protocol" section of the text that would let the EU buy or lease Russian pipes pumping Central Asian gas to Europe.

"There are logical contradictions [in the transit protocol]," Mr Putin explained. "They [the EU] insist certain sections of the pipeline system could be rented. But how can we then guarantee supply to our European partners? These risks would be transferred to you, with higher [gas] prices," he warned.

The change in mood comes less than 24 hours after the G8 leaders and the EU signed a political commitment to open up each other's markets in the name of global energy security, in line with the EU's own fledgling "energy security policy" launched in March.

Speaking after the G8 deal, European Commission president Jose Manuel Barroso mentioned the Energy Charter Treaty as one area in which Russia could show good faith on the G8 promise by concrete follow-up action.

The G8 agreement — which is not legally-binding — is "based on the same principles as the Energy Charter Treaty" Mr Barroso had said.

RUSSIAN TANGO. The Russian leader indicated that Russia has already shown good faith by offering German firms E.ON and BASF access to the Yuzhno-Russkoye gas field in a complex deal that could see E.on handing over its shares in Hungarian energy distributors to Russian state-owned gas giant, Gazprom.

"We allowed them access to one of our largest deposits," Mr Putin said. "And we took some of their assets. Maybe in central Europe, some assets will be taken under control too," he added in a situation that is being closely watched by Russia-wary Polish diplomats.

Gazprom's interest in buying the UK national gas distributor — Centrica — in February also saw the Russian side spurned by the British government, although a formal Gazprom bid could still emerge.

"The Centrica thing is all about opening up access to each other's markets — it tales two to tango," a senior Russian diplomat told EUobserver on the fringes of Mr Putin's post-G8 press conference.


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