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New EU energy package aimed at blocking Russia

World

A European Union plan to break up utility companies and limit foreign ownership of European energy firms is widely perceived here as a measure to counter Russian state-owned enterprises suspected of having political rather than commercial interests.

A new package proposed by the EU’s Executive Commission calls for “full ownership unbundling” of energy companies, with production and distribution to be separated. Safeguards aim to ensure that companies from third countries who wish to acquire a significant or controlling interest in an EU network comply with the same unbundling requirements as European companies. EU countries will have to agree on the energy package at a December 3 meeting of energy ministers, before it is put to EU heads of government at a summit later that month. Although the package does not explicitly mention Gazprom, the Russian state-controlled giant has long been accused of using energy as a political lever on behalf of the Kremlin. Gazprom supplies 25% of Europe’s gas.

European press reports characterize Brussels’ plan as an attempt to keep Russia’s energy expansion in check, with the Austrian Die Presse saying “Brussels stops Gazprom’s spending spree,” and Kurier calling the energy regulation a “safeguard clause against Gazprom.” The Russian company is present in 17 of the EU’s 27 member states. It is widely reported to have its sight set on Austria’s largest oil company, OMV, and Germany’s largest energy provider, E.ON. EU energy commissioner, Andris Piebalgs, a Latvian, told the Czech newspaper Hospodarske noviny that the new energy initiative will put Europe in control of its own affairs in matters concerning energy security.

Another Czech newspaper, MF Dnes, noted that while the European Commission has been looking for a way to stop Russian investors from entering its energy market, some enterprises have themselves already joined forces to defend against Russian bids. For instance, Czech power giant CEZ fended off Russian attempts to participate in its privatization, and then signed a cooperation memorandum with the Hungarian oil and natural gas firm, MOL - helping MOL in its bid to prevent a takeover by Austria’s OMV, which is cooperating with Gazprom.

Poland’s center-right political leaders have proposed the creation of an energy alliance, or “energy NATO,” to keep Russian influence at bay. The new EU rules are controversial, however, as the unbundling requirement will force producers to sell their pipelines and grids. France and Germany are among member states fighting the move partly because companies in those countries will be particularly affected. French Minister for European Affairs Jean-Pierre Jouyet suggested the break-up of utility companies forced to sell their network would weaken them against other players in the market, such as Russia.

Vaclav Bartuska, ambassador-at-large for energy security at the Czech foreign ministry, told Cybercast News Service, that Prague considers the liberalization package a step in the right directions towards energy independence. But it also stressed the need for a through discussion on the separation between power supply and transmission networks. The Czech Republic’s CEZ supports the initiative, as it already has a separate distributor. Countries formerly under Soviet domination seem generally to be more sensitive about Russia’s energy presence, especially at a time when the issue is intertwined with Moscow’s opposition to the proposed US ballistic missile defense (BMD) system in the region. Recent criticism of the BMD plan by Austria’s defense minister was interpreted by many here as a case of a government backing Moscow because of its dependence on Russian energy supplies. Make media inquiries or request an interview about this article. (crosswalk.com)

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