Package of problems

The EU adopted a document titled “Third Energy Package”, which the athors believe will help bring about a civilized energy market on which  monopolists will have no influence.

The document adopted in 2009, says that producers of gas and oil cannot operate transport network, to prevent arbitrary hiking of prices. But the document means more than meets the eye. Of course, the interests of consumers  should be protected, but on the condition that  all other options are taken into consideration. Indeed, in 2009 prices on long-term contracts were high due to the global crisis, but they have since begun to come down to their old levels since the world economy is picking up.  It is generally believed that the Third Energy Package is aimed at preventing the Russian Gazprom company from operating on the European market, a point made by the Russian Prime Minister Vladimir Putin in Brussels during talks between Russia and the EU. “ For example, Gazprom and its German partner have laid a  pipeline and they  are  told to allow a different consortium to join  them to reap the benefit of their labour, meaning that Gazprom and partner would be selling gas at the  grace of the EU”. That would ultimately lead to the raising of the price on gas since the third consortium will  also want to make money”, Putin said. Analyzing the likely result of such a liberalization in an interview for VOR, Boris Frumkin of the Russian Academy of Sciences’ Institute of Economy said.

“The tariff  for the granting of access will be fixed not by  the companies  which  spent money developing the gas fields, but by a nebulous national or supranational regulators, a  thing capable of discouraging the capitalization of gas companies in Russia, and probably in Norway which also sells gas to EU member-states. It would also discourage investments in gas pipelines since it would be unviable and  ultimately raise the cost of promoting energy security of  the EU,” says Frumkin.

The unrest in North Africa and the Middle East, from where the EU gets a significant proportion of gas are of  great concern to Europe. Until now, the EU viewed those regions as an alternative to Gazprom, and it had an impact on EU desire to reach a compromise during talks with Mr. Putin in Brussels. Commenting on this point, Alexander Pasechnik, head of the analytical department of the National Energy Security Foundation said.

“About a month ago, Europe looked at Russia as an unreliable supplier of gas and  said that Gazprom’s domination should be curtailed and its presence on the European market restricted. But the current political situation in the world has forced Europeans to have second thoughts, giving Russia an advantage” Pasechnik believes.

Under the prevailing conditions in the world, Russian gas could make up  for Europe’s shortfalls, and hence there was a readiness to reach a compromise in Brussels, Pasechnik says. Russia has been and remains a reliable and trusted supplier of  gas to Europe, and the reaction of  Europeans to the charge by Vladimir Putin of  an attempt to expropriate the property of Gazprom, is a true testimony of the indispensability of Russia  as a supplier of energy to Europe.

By Alexander Vatutin

The Voice of Russia, 03 March 2011