Are you sure?

Gazprom says Poland veto, EU policy crimps energy investment

OAO Gazprom, Russia's state-run natural gas export monopoly, urged the European Union to set aside concerns raised by member states such as Poland to forge a unified energy policy that would encourage producers to invest, ensuring the stability of future gas supplies.

„The growing politicization of commercial relations is causing concern,” Stanislav Tsygankov, OAO Gazprom's chief of foreign relations, said on Thursday in Helsinki. „A big part of the problems that concern us is linked to changes to the European gas market during its liberalization.” Gazprom is concerned that plans to open up Europe's gas market may make it harder to earn back investments to increase output and supply capacity, Tsygankov said at a conference in Helsinki.
Russian President Vladimir Putin arrived in Helsinki yesterday for a one-day EU-Russia Summit today. Europe may rely on the Russian company for a third of its gas within a decade, up from 25% now. EU leaders have expressed concern about Gazprom's reliability after the company's dispute with Ukraine at the start of this year cut gas supplies to countries including Poland, Italy and Hungary.

Russia and the EU are seeking to overcome Poland's veto on the official start of talks on a new accord on cooperation in areas such as energy which would replace a 10-year agreement that expires in 2007. All 25 EU members must give the European Commission a mandate to negotiate a new accord. Poland has refused because of Russia's ban on imports of its meat products and the unwillingness of Putin's government to sign a separate agreement regulating energy trade. „The Polish demands as a condition for the start of talks are unfounded,” Tsygankov said.
There is also a „lack of clarity” on the policies on protecting investments and transit accords, he said. Gazprom is also concerned about proposals for the gas market in Europe, such as obligatory re-sale of imported gas and the introduction of limits on the length of contracts between wholesale suppliers and distribution companies, he said. „Those actions in our view considerably influence the system of long-term contracts which exists and is the basis of energy security of Europe,” he said.

Gazprom can't commit billions of dollars in investments in new fields and pipelines unless Europe „chooses its position' and acts as a unified front. The diversity of voices within the EU is making it difficult for Gazprom to decide on long-term investment strategy, he said. „All questions linked to large scale infrastructure projects should be decided by us in a dialogue with the European Commission which is expressing the agreed opinion of all of its members,” Tsygankov said.
Gazprom, the world's largest natural-gas producer, last month said it plans to raise investments to €53.1 billion ($69 billion) through 2009 to develop new fields amid concerns the company may not meet soaring demand in Russia and Europe. An even greater concern for Gazprom is proposals to ban a company owning different parts of the gas business, which could kill off investment incentives, he said.
„They will certainly lead to a lack of sufficient guarantees for investors and that means that the main players in the market will stop investing in the development of infrastructure,” he said. The Russian company favors long-term contracts, which existed going back to the Cold War. (Bloomberg)