A New Round in the Gas Game

2009/06/14

While Russia Wants In on Gas Transport and Processing, the EU Wants it Out

As the struggle for dominance over the supply routes of Russian and Central Asian gas to the EU countries intensifies, the conference on energy dialogue between Russia and the EU scheduled to take place in Berlin on May 19 is looked upon with hope. The agenda of the conference is expected to fill up fast because of the dramatic rivalry between the EU, Russia, the United States and Central Asian countries for control over production of natural gas in the former Soviet Union.

The conference will be attended by about 400 representatives of the EU countries and 100 Russians. The most respected companies, such as Germany’s E.On, Italy’s ENI, Gaz de France and Russia’s Gazprom will all be represented.

The ruling bodies of the EU do not even try to conceal their hostility toward any projects that involve Russia’s participation in natural gas supplies to Western Europe, proclaiming “a decrease in the energy dependence on Russia” as their mantra. Recently, the European Parliament adopted the so-called third legislative package, aimed at making it more difficult for Russian energy companies to invest into the European pipeline infrastructure and oil refineries. This step is supposed to leave Russia in the position of a net supplier of crude oil and gas but prevent Russia from partaking in the processing and distribution of these fuels in the EU countries.

“If some factions in the European Parliament and certain political circles in Central and Eastern Europe had their way, the energy cooperation between the EU and Russia would have been reduced to zero long ago,” said Yuri Borko, a senior research fellow at the Institute of Europe of the Russian Academy of Sciences. “What prevents this from happening is the position of national governments and energy companies in Europe, which are responsible before their citizens and consumers and do not want to leave them freezing without gas in the winter because of some geopolitical rivalry. We are not pumping gas directly into the building of the European Parliament. We are bringing it to European gas pipelines.”

The European Commission and the United States are lobbying projects that would bring to Europe gas from Central Asia and possibly even from Iran while bypassing Russia, via the Caspian sea, Azerbaijan, Georgia and Turkey. Russia is offering a cheaper route which would bypass the Caspian Sea in the north and run through Russian territory. The project, tentatively called Nabucco, is yet to get final approval from the energy companies. Russia is also making an effort to buy the so-called Caspian gas from its producers in Azerbaijan, Kazakhstan and Turkmenistan, in order to distribute it among its own consumers and Gazprom’s clients in the rest of Europe.

Moscow is resisting the EU’s efforts to put its pipeline system under the control of Western European energy companies. Officially, this is why Russia did not join the Energy Charter signed by 27 EU member countries, as well as some neighboring states. Russian membership in the Charter, Moscow government officials say, would put Russia’s pipelines under foreign control, an unacceptable development for Russia. “I would point your attention to the fact that some of the big players on the international gas market, such as Norway, the United States and Canada, ignore the Energy Charter, which the EU basically drafted for itself, forcing its 27 members to join it,” said Valery Yazev, the deputy chairman of the State Duma and the head of Russia’s Gas Society, at a press conference in RIA Novosti. Yazev is supposed to head the Russian delegation at the Berlin conference. “When Ukraine, formally a member of the Charter, blocked the supplies of Russian gas to the rest of Europe in winter, this was a clear violation of the Charter’s rules, but none of the Charter’s apparatchiks protested. In this situation, Russia will have to determine its position on the Charter. We may participate on a temporary basis, as we did during the Ukrainian-Russian crisis in winter, but becoming a full member of a Charter which is binding for Russia and non-binding for Ukraine does not look like a good solution.”

Russia’s alternatives to the Nabucco project include two pipelines supplying gas to the north and south of the EU called Nord Stream and South Stream. Both projects will also be discussed at the conference in Berlin. Nord Stream, which is due to supply Russian gas from Western Siberia to the north of Germany via the Baltic states is expected to be ready by 2013, Yazev said. The participants of the Berlin conference will discuss the difficulties arising from the opposition to the project from Sweden and Poland. “The pipeline is progressing at a speed of three kilometers a day,” Yazev said. “We made every effort to address the environmental concerns. As for political opposition from Sweden and Poland, we hope that the EU understands that Nord Stream is being built in the interests of the EU and not only in Russia’s interests.”

more: www.russiaprofile.org

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