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Thursday, October 18, 2007

EU says Russia will wait for expert advice before deciding on EU energy rules

October 16, 2007 - The Associated Press - BRUSSELS, Belgium: Russia will wait for expert advice on how new EU energy rules would work before deciding whether or not the draft law targets Russia's state-owned natural gas monopoly OAO Gazprom, the European Union's energy chief said Tuesday. The EU executive raised hackles in Moscow by threatening to ban foreigners from its gas and electricity markets unless they follow free market principles and join European businesses in separating their supply operations from infrastructure such as pipelines and power grids. This takes aim at cash-rich Gazprom, which some Europeans fear would be well-placed to buy up energy units that companies such as E.On AG or EdF may have to offload as regulators try to break their grip over the supply chain. The European Commission says things must change because large companies are keeping prices too high, shutting off competition and preventing investment in new infrastructure. But it insists that rules preventing energy companies dabbling in both supply and network operations must also apply to non-EU firms. Gazprom would be the main target of this because it has already acquired a large number of stakes in EU energy businesses. But EU Energy Commissioner Andris Piebalgs said Russian Energy Minister Viktor Khristenko had agreed not to take a firm position on Europe's draft "unbundling" rules until experts had looked at the details. As "all the difficulties come into detail ... the minister said that he would very much welcome this consultation at expert level that will clearly identify 'are there issues, what type of issues' and only then will the minister take his political position," Piebalgs said. Khristenko told reporters that Russia wanted to actively consult with Europe on new energy initiatives, calming the waters by saying they share common goals. "We all agree on one objective and that is we want to ensure security of energy supply. We want to ensure predictability which will allow for sustainable development," he said. Russia's reliability as a gas supplier came into question nearly two years ago when it shut off European deliveries in a dispute with neighbor Ukraine. Europeans want Russia to sign up to international energy rules and open up to foreign investment but Moscow has refused, claiming it can be trusted. The European Commission said last month that non-EU companies must "comply with the same unbundling requirements as EU companies." It proposed that non-EU companies can buy all or part of an electricity or gas transmission network only if its home country signs a treaty with the EU in which it commits to return the favor of free market access. The plan to allow splitting up energy businesses needs the backing of the European Parliament and EU's 27 governments — which can make changes before it comes into force.

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