Putin: EU energy package should not affect existing contracts
Russia's President Vladimir Putin, left, European Commission President Jose Manuel Barroso, centre, and European Council Preside
Following the Russia-EU summit near St Petersburg on 4 June, Russian President Vladimir Putin once gain criticised the European Union’s Third Energy Package, saying it should not be applicable to deals signed previously. The package, which came into force in EU nations in September 2009, orders the separation of gas sales and transportation businesses and requires access for third parties to gas transportation grids. Russia’s state-run gas monopoly Gazprom, which covers 25% of Europe’s gas needs, strongly opposes the package, saying it will divert investment away from gas transportation systems. The Russian company is also concerned that European Commission-initiated package may force Gazprom to transfer from long-term contracts to spot prices.
“This, and other documents of the kind, should not be back dated to the contracts that were signed before the decision on the third energy package came into force,” Putin told a news conference wrapping up the summit.
“This, and other documents of the kind, should not be back dated to the contracts that were signed before the decision on the third energy package came into force,” Putin told a news conference wrapping up the summit.
European Commission President Jose Manuel Barroso said the new law was not discriminatory and was totally in line with international law. The Commission has said the package is aimed at boosting competition on the energy market, allowing other players to join the sector, and liberalising energy prices.
Meanwhile, Putin continued pushing the Russian-backed South Stream gas pipeline, saying at the EU-Russia summit on 4 June that construction work will start at the end of 2012, which is earlier than originally planned. "In December last year the implementation of the pipeline project South Stream gained a new impulse. Turkey approved the passing through of the pipeline through its exclusive economic zone. We have received consent from the government in Turkey. We plan to start building at the end of this year,” Putin said.
The project is expected to become operational by the end of 2015. The South Stream pipeline is intended to transport up to 63bn cubic metres of Russian natural gas to Central and Southern Europe annually, diversifying Russian gas routes away from transit countries such as Ukraine. The pipe will go from Russia to Bulgaria via the Black Sea; in Bulgaria it will split in two – with the northern leg going through Serbia, Croatia, Hungary, and Slovenia to Austria and Northern Italy, and the southern leg going through Greece to Southern Italy. Recent reports have indicated, however, that Russian energy giant Gazprom may give up on the construction of the offshore section of the South Stream gas pipeline to Austria. Regarding plans to drop Baumgarten as a hub, Sergei Komlev, head of Contract Structuring and Price Formation Directorate in Gazprom Export, the trade arm of Gazprom, told New Europe on 31 May that the final route of the South Stream pipeline has not been decided yet.
On 4 June, Gazprom CEO Alexei Miller said the Russian gas giant will start construction of South Stream with two parallel legs. "We plan to build two pipeline legs with a capacity of 15.5bn cubic metres each; they will be built in parallel," Miller was quoted as saying by the press. Overall, Gazprom plans to build four pipeline legs for the project. A board of directors meeting for the South Stream operator has been scheduled for June to present information to shareholders for an investment decision on the project, Miller said. The Black Sea underwater section of South Stream between Russia and Bulgaria will be 900 kilometres long, and will be constructed at a maximum depth of two kilometres. / from Europe on line
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