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Thursday, February 19, 2009

Medvedev acknowledges energy policy 'mistakes'

02-18-2009 - International Herald Tribune-AP - MOSCOW: Russia sometimes makes "mistakes" in its dealings with other nations on energy issues, President Dmitry Medvedev acknowledged Wednesday, calling for deeper dialogue with key partners, including the United States and Europe. Medvedev also said Russia must strengthen its position on global energy markets and ensure its influence over prices for oil and gas, which are crucial sources of revenue. The rare admission of mistakes and the call for closer interaction set a conciliatory tone in the wake of January's suspension of Russian natural gas supplies to Europe via Ukraine. Medvedev may have been signaling that Russia wants to mend fences with the West on the divisive issue of energy — and warning his own government that using energy as a political weapon does not always work. "We ourselves make mistakes at times, we do not fully calculate political risks and practical consequences," Medvedev said at a meeting on improving Russia's global energy policy, according to a Kremlin transcript. The two-week suspension of supplies to Europe badly damaged Russia's reputation, despite its insistence that Ukraine was to blame. Deliveries dried up when Russia's state-controlled monopoly Gazprom turned off the taps in a politically charged price dispute with Ukraine; most of the Russian gas sold to Europe arrives through Ukrainian pipelines. Russia and the EU both want guarantees against a repeat of the cutoff, but they have clashed over the format. Medvedev has rejected EU pleas to join the Energy Charter, a treaty that would open up its rich gas fields to more foreign participation, and has pushed for a new international accord. Meanwhile, hopes that emerged a few years ago for close energy cooperation between Russia and the U.S. faded as political ties swiftly deteriorated. "We should step up our dialogue with the countries of the (former Soviet Union), with the European Union, the U.S. and other leading world states," Medvedev said. But he also said Russia should "more closely coordinate its activities" with OPEC members and with other gas producers, a prospect that worries Western consumers. Medvedev spoke after a meeting with Japanese Prime Minister Taro Aso on Russia's Pacific Island of Sakhalin, where they attended the opening of a liquefied natural gas plant that is to send about half its production to energy-hungry Japan. Gazprom sees Europe as its most important market in the medium-term, despite EU efforts to diversify supplies, the ITAR-Tass news agency quoted Gazprom CEO Alexei Miller as saying. He said Europe will likely rely on Russia for as much as 35 percent of its gas by 2020. But Medvedev acknowledged that improvements to Russia's own energy sector are overdue, including increasing efficiency and economizing. "One must honestly admit there has been little progress," he said. Analysts say costly efforts to modernize infrastructure and develop new fields have been put off too long and will be doubly difficult now amid Russia's deep financial troubles. Medvedev urged the Cabinet to come up with a medium-term plan of action on Russia's energy goals and a program aimed at bolstering its global energy clout. "The bottom line is that our situation and the welfare of our citizens will depend on how actively and consistently we function in the international arena, in energy cooperation," Medvedev said.

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