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Romania, joining EU, to cut role of unreliable Russian gas

Romania, set to join the European Union Januar 1, will build more nuclear reactors and may reopen coal mines to slash its reliance on natural gas amid concerns Russia is using its dominance of the fuel for political ends.

Romania is accelerating plans to complete three nuclear reactors, President Traian Basescu said November 11 in the Romanian mountain resort of Sinaia. Europe may also lose out if Russia decides to sell more gas to China, he said. The country imports about a half the gas it uses, mainly from Russia's OAO Gazprom, the world's biggest gas producer and exporter. “Europe has an energy problem because Gazprom has a problem from the point of view of guaranteeing gas deliveries,” the 55 year-old president told journalists.”We believe that Europe's highest priority is that of seeking alternatives. We wonder when Gazprom will start telling us that if we're not good children it'll start giving the gas to China?” Gazprom, the state-controlled gas-export monopoly, supplies a quarter of Europe's gas and ships about 80% of that through Ukraine. The company cut supplies for three days in January in response to Ukraine's rejection of a fourfold increase in prices. That caused shortages in European countries including Romania, Italy and Hungary.

Russia in March agreed to supply China with 80 billion cubic meters of gas a year starting in 2011. Gazprom is considering three routes for those supplies, including a project to take gas from eastern Siberia. “To me it's clear that Gazprom will never be able to fully satisfy both the needs of China and those of the European Union,” Basescu said. Basescu, a former Bucharest mayor and transport minister, said Russia can pressure countries by allowing Gazprom to charge different prices. “Some countries get the gas for $120 per 1,000 cubic meters, some for $220, some for $180, and others for $280 or $300, in line with the interests that Moscow manifests one way or another through Gazprom,” Basescu said. Gazprom's pipelines also run through some areas where there is conflict, adding to concerns about supply disruptions, the president said, without naming any countries. Romania, a former communist country that was part of the area dominated by the former Soviet Union until 1990, will start its second nuclear reactor in Cernavoda, in the east of the country, in spring next year. It will then build two more reactors, Basescu said.

The country's sole nuclear reactor in Cernavoda, one of only two built with western technology in eastern Europe, supplies about 10% of Romania's electricity. Romania would have to reopen some of the coal mines closed in the last decade if it were to again use coal instead of gas for its power plants. “We're analyzing a hydro-thermo-nuclear mix in order to diminish our energy dependence to a maximum,” Basescu said. “Romania already is one of continental Europe's least energy- dependant states.” Romania's president has more power than in some other European countries. As well as naming the prime minister, the president has the power to veto laws and heads the armed forces. E.ON AG of Germany, Spain's Iberdrola SA, Enel SpA of Italy and 10 other companies bid to build Romania's third and fourth nuclear reactors by 2012, which that will cost the country €2.2 billion ($2.8 billion), the government said June 29. AES Corp. of the US, Canada's Gabriel Resources Ltd. And Germany's RWE AG, Korea Hydro & Nuclear Power Co., Romania's Electrica Bucuresti SA and Alro SA, Belgium's Electrabel SA, and three groups from Canada, Italy and Luxembourg were also among the bidders. (Bloomberg)