Putin seeks to calm EU nerves over energy supplies

Lahti, October 21:

Russian president Vladimir Putin assured EU leaders that his country would be a reliable and predictable oil and gas supplier after recent EU concerns about Moscow’s hard-nosed approach to foreign energy investors.

With Europe becoming increasingly dependent on Russia for energy, EU leaders were eager for signs that Moscow would keep a steady stream of gas and oil pumping westward to them. “I would like cooperation to be not only mutually beneficial but that it be founded on common principles,” Putin told journalists after a dinner meeting with EU leaders in Lahti, southern Finland.

Putin said that he told EU leaders that ‘cooperation must be based on the principles of predictability and stability of markets and also the reciprocal responsibility of energy producers and consumers’. The EU currently covers a quarter of its oil and gas needs with supplies from Russia, although that is likely to grow in coming years as sources in the North Sea dwindle.

Warning against ‘over-politicising’ EU-Russian energy relations, European Commission president Jose Manuel Barroso said, “we should not let energy divide Europe and Russia as Communism once did”.

“I think we can say clearly that Russia needs Europe just as Europe needs Russia,” he added. “We need to acknowledge and benefit from this interdepenedency and that concept appeared several times during our very open talks.” However, he acknowledged for that to take place ‘mutual trust’ needed to be developed, which required ‘transparency, rule of law, reciprocity and non-discrimination along with market opening and market access’.

Spelling out her view of EU and Russia’s energy interdependence, German chancellor Angela Merkel said, “We want access to the Russian market just as Russia wants access to European markets”. The Europeans have been concerned about Russia’s recent decision to develop the huge Shtokman gas field without foreign partners and threats to halt a project off Russia’s Pacific coast run by Anglo-Dutch energy giant Shell on environmental grounds.

Putin said that Gazprom’s decision on the Shtokman field “in no way means a change of the rules of the game” in Russia and that rapidly changing laws in his country were aimed at improving the climate for foreign investment and not the inverse.

“Our laws have developed quickly but the aim is to improve the situation (for foreign investment), not to worsen it,” he said. “The general direction is to guarantee foreign investments in the Russian economy, their property rights,” Putin added.

At the beginning of the year, Gazprom switched off the gas taps to Ukraine amid a price war, hitting some supplies to Europe during a bitter cold-snap and awakening the EU to the power of energy as a foreign policy tool. EU foreign policy chief Javier Solana said that an agreement would be signed with Ukraine and Russia in the coming days. “They will have a guarantee of supply of gas for all the countries of Europe that have links to the pipeline, which is most important pipeline that supplies gas to Europe,” he told a news conference ahead of the dinner with Putin.

The EU’s emissions trading market requires European companies to buy permits for their emissions of carbon dioxide that exceed national allowances. However, British prime minister Tony Blair said one of the best ways to avoid future problems with Russian energy supplies was to diversify sources.

“I’ve made it clear as far as Britain is concerned we have to have diversity of supply,” he said. “That is the reason why Britain signed a deal with Norway earlier in the week.”