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Friday, September 21, 2007

EU blocks Russian investment

MOSCOW. (RIA Novosti economic commentator Oleg Mityayev) - On September 19, the European Union (EU) Commission adopted a plan that will drastically change the energy map of the Old World. The EU wants to prevent non-EU members from investing in its energy infrastructure. These measures will primarily be directed against Russia's Gazprom, which supplies Europe with a quarter of the gas it consumes. Formally, the European Commission's plans are born of noble intent - to make the EU energy market more open and competitive by compelling major energy companies to sell part of their pipelines and electricity networks or transfer control over them to independent companies. The Commission believes this will help prevent monopoly prices and that monopolists do not want to make serious investment in the energy infrastructure, which the Old Europe so badly needs. But at the same time, the EU wants to protect itself against non-EU predators which are eager to buy its gas- and electric-distribution networks. Under the plan, these restrictions should remain in force until outside investors divide their vertically integrated companies which control the whole chain of energy supplies. Besides, governments of non-EU states have no right to interfere in management of European gas- and electric-distribution networks. After fulfilling these demands, each non-EU country will have to sign an agreement with the EU which would allow its companies to claim the purchase of energy facilities in the European Union. It is an open secret that these restrictions are primarily aimed against the state-controlled Russian Gazprom. It already owns a number of energy assets in the EU and has repeatedly voiced its intention to buy more. The European Commission's plan to liberalize the energy market has already annoyed major EU members - France and Germany. The energy giants Electricite de France and E.ON, which will be hit by the reform, are operating in these countries. France and Germany believe that it will be very hard to carry out the EU plan. Moreover, it will engender serious difficulties in the energy market by causing a huge wave of legal disputes between the operating companies.

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