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. Last Updated: 07/27/2016

EU Seeks Clarity on Energy Projects

ReutersPiebalgs, left, conferring with Christer Michelsson, right, of the Finnish mission in Russia, at Monday's meeting.
EU Energy Commissioner Andris Piebalgs urged Russia on Monday to improve its investment climate and cautioned that the country needed a lot of cash quickly if it hoped to meet the growing European demand for natural gas.

A senior U.S. official, meanwhile, criticized increasing energy cooperation between Europe and Russia.

Piebalgs' remarks came during a Moscow conference aimed at bolstering energy dialogue between the European Union and Russia. In contrast, the United States has all but abandoned energy talks after the 2003 arrest of Yukos founder Mikhail Khodorkovsky, the leading proponent of cooperation between U.S. and Russian companies.

"There is a recognition that there is a need for secure and predictable investment conditions to both the European and Russian companies," Piebalgs said.

Dark clouds are hanging over Shell-led Sakhalin-2, the country's largest foreign investment project, and several other large oil and gas ventures after authorities threatened to shut them down over possible environmental violations. Some investors fear the threats are linked to a state drive to secure control over energy resources.

Piebalgs said the EU would like more information about what the state is thinking. "The regular flow of information with respect to policy will increase our understanding," he said.

He added: "There is also a need for a level playing field in terms of market access and access to infrastructure, including third-party access to pipelines in both Russia and the EU."

The EU has long urged Russia to let European companies have access to its natural gas pipelines, and Piebalgs warned that Gazprom's monopoly on gas production and exports might make it harder for the company to gain access to European retail markets.

The Kremlin has said it is seeking "strategic reciprocity" from Europe. Industry and Energy Minister Viktor Khristenko stressed that point Monday, telling the conference that Russia was seeking "mutual access to markets."

"We must coordinate our energy strategy together," he added.

With European gas consumption due to grow by two-thirds in the next 20 years, many countries have begun looking increasingly to Russia to meet anticipated demand. Europe currently imports one-half of its gas, but Piebalgs said that amount was set to jump to three-quarters by 2030.

The EU is seeking "transparency and certainty" that significant investment will be made in the near future to meet the demand, Piebalgs said. "There is a need for investments in new oil and gas fields to be made in good time," he said.

Europe already relies heavily on Russia for gas, importing around 25 percent of its total supply from its eastern neighbor, with Germany leading the pack. That amount will rise to 33 percent within a decade, said Matthew Bryza, U.S. deputy assistant secretary of state for European and Eurasian affairs.

Bryza criticized Europe's dependence on Russian gas and took special issue with the $6 billion North European Gas Pipeline project, which is to ship Russian gas under the Baltic Sea to Germany.

"That project simply raises the question what diversification means when it comes to gas supply," Bryza said in an interview published Monday in the Financial Times Deutschland. "If you live in Germany, you do not want to go through what happened last winter with Ukraine."

Gazprom briefly cut gas to Ukraine amid a price dispute in January, causing a drop in supplies to Europe. Most Europe-bound gas goes through Ukrainian pipelines.

Bryza also warned that growing European support for the Baltic pipeline could undermine the continent's solidarity in negotiations with Russia, since the pipeline bypasses Poland.

State-controlled Gazprom holds a 51 percent stake in the pipeline, with the remainder held by Germany's E.On and BASF, which are to cede some shares to Dutch Gasunie in a deal signed this month.

"Very often the monopolist will work to cut a specific deal with an individual country," Bryza said in an apparent swipe at Gazprom. "If that happens, it's much harder for Europe to stand together."

EU leaders put on a united front during energy talks at a mini-summit with President Vladimir Putin in Helsinki this month.

Sweden and Finland expressed concern Monday about the environmental impact of the Baltic pipeline. Swedish Foreign Minister Carl Bildt said Sweden would demand an environmental study of the effects of the pipeline. Defense Minister Sergei Ivanov, who is visiting Stockholm and will meet Bildt on Tuesday, offered reassurances. "The construction will be done in a very open and transparent way, with every consideration to environmental issues," he said. Ivanov said the Navy would help Gazprom lay the underwater pipeline.

Piebalgs also said Monday that attempts to convince Russia to ratify the international Energy Charter Treaty were no longer the focus of the energy dialogue but that the issue was still under discussion. Russia has refused to ratify the treaty because of its accompanying Transit Protocol, which would open its pipeline monopoly to third parties.