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REVIEW: Russia-EU Gas Relations Challenged by Political Games
Monday, 12 May 2014 13:36
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REVIEW: Russia-EU Gas Relations Challenged by Political Games

MOSCOW, May 12 (RIA Novosti) – Energy relations between Russia and the European Union have never been so politicized as they are now, not even during the Cold War, the deputy chairman of the energy committee in Russia’s lower house of parliament said Monday.

“Unfortunately, even though the issues of gas supplies and gas prices are really commercial, they are much politicized now,” said Pavel Zavalny, speaking at a press conference ahead of an international conference on Russian-EU energy matters.

“I want to recall that gas supplies from Russia began supplying Europe 40 years ago during the Cold War, but even then economic reasons and energy demands won over political confrontations,” he added.

Russian Deputy Energy Minister Anatoly Yanovsky said that due to the current Ukrainian crisis some European countries that have no alternatives to Russian gas are under threat of energy collapse.

“The biggest risk is for countries that, unfortunately, do not have alternatives to gas supplies that are transited from Ukraine, namely Bulgaria, Bosnia-Herzegovina and a few other countries of Southeastern Europe,” Yanovsky said.

“It is all very well that Ukraine is now getting loans, but firstly, they will have to pay them back somehow and secondly, we have not received any payments for the gas supplies that have already been made,” Yanovsky said, referring to Russian gas supplies to Ukraine.

Zavalny underlined that even though Russia has recently cancelled two major gas discounts for Ukraine, it is not suspending energy cooperation with its western neighbor.

“The contractual relationship has not been suspended,” he said. “Not so long ago in 2009, when the current contract was signed, in Europe the market price was over $500 for thousand cubic meters of gas and back then this price was considered absolutely fair and reasonable,” Zavalny said.

He added that the current gas price for Ukraine, $485 per thousand cubic meters, is indeed higher than for the rest of Europe, but Russia is open for negotiations on the issue as soon as Kiev pays its current debt of $3.5 billion.

“Ukraine should pay at least by the price it considers fair, it would have been a start for negotiations. But it does not want to pay at any price, they haven't paid even for the first quarter when the price was $268, we have not received a penny for this. Before negotiating a lower price, you have to at least pay for what you have already got,” Zavalny said.

Deputy Energy Minister Yanovsky added that Russian energy giant Gazprom is now forced to demand pre-payments from Ukraine’s Naftogas under the conditions of existing gas contracts.

“It is not a matter of Gazprom wanting or not wanting [to demand pre-payment], it is an obligation under the gas contract, because in order to supply gas to Ukraine, Gazprom has to pay custom duties to the Russian budget, that is why it simply must ask for pre-payment,” Yanovsky said.

Commenting on the anti-monopoly investigation launched against Gazprom by the European Commission, Yanovsky said the Russian company submitted all the necessary documents to the EU and is now awaiting a fair and impartial decision.

“I hope the decision of the European anti-monopoly commission will be balanced and free from that extremely politicized attitude that has become so typical for our energy relations in recent years,” Yanovsky said.

“Just a simple example – our colleagues in the professional energy community will be holding a conference in Brussels and invited European officials but even though they are in the same city, not somewhere across the ocean, they refuse to attend and express their opinion and listen to our experts. I do not think it is normal,” he added.

He underlined that Gazprom is ready to sign a major gas contract with China, which would cover the losses from possible European sanctions against the Russian energy sector. Moscow is also considering increasing supplies through the Nord Stream and Opal pipelines.

Zavalny, however, said direct sanctions are very unlikely, as the EU is too dependent on Russian gas.

“I believe there will be no sanctions, apart from only political attempts to limit opportunities for the Opal pipeline, which has still not been decided upon, and to challenge the South Stream pipeline, although everybody understands that South Stream improves the security of gas supplies to eastern and southeastern Europe,” Zavalny said.

Deputy Energy Minister Yanovsky agreed that sanctions are counterproductive and suggested that EU officials should seriously consider the events of recent years that have had a negative impact on both the political and economic situation in Europe.

“In recent years we have been witnessing how serious tensions were raising around Europe – Iraq, Lybia, Egypt, Syria, now there are tensions in Ukraine – we see on television how people are suffering there every day,” Yanovsky said.

“It is notable that these tensions arise in the territories of the countries connected with energy supplies to European countries. Think about who needs these tensions? Did Russia trigger the unrest in Syria or in Iraq? Does Russia need this turmoil and sufferings in Ukraine? No, we want to have a normal trade and we want to be paid for our supplies,” he added.

Earlier on May 2 Russian and EU officials met in Warsaw to discuss gas supplies in connection with the ongoing Ukrainian crisis. The next round of multilateral talks is scheduled for May 16.

On Monday, European energy officials are to meet with Gazprom and Naftogaz representatives in Brussels. The capital of Belgium will also host the ninth international conference “Energy Dialogue: Russia-European Union, Gas Aspects” on May 14, where the situation with Ukraine’s gas transit as well as the EU Third Energy Package will be discussed with leading experts from 180 countries.

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source: http://en.ria.ru/russia/20140512/189764545/REVIEW-Russia-EU-Gas-Relations-Challenged-by-Political-Games.html