July 14, 2024

Russia Criticizes E.U. Rules to Open Up Energy Market

BRUSSELS — A top Russian official on Wednesday sharply criticized European Union rules aimed at making the bloc’s energy market more competitive, suggesting that they could jeopardize a giant pipeline project called South Stream.

Sergei I. Shmatko, the Russian energy minister, said that if companies behind projects like South Stream were “deterred from initiating them or face restrictions over the returns they can expect on their investments, the result will be detrimental, above all to the interests of consumers.”

South Stream, which sponsored the event where Mr. Shmatko spoke, is backed by Gazprom, the Russian state-owned natural gas monopoly. The pipeline would run under the Black Sea, bypassing Ukraine to supply customers in Europe. It is a rival to Nabucco, a project backed by the European Union.

The minister was criticizing E.U. legislation that includes rules forcing energy companies to share their infrastructure with competitors. Mr. Shmatko said that intensive talks were under way with the European Commission, which is the E.U. executive branch, and that he expected a decision by autumn on how those rules and others would apply to South Stream.

Nabucco is already exempt from some of the rules about sharing its pipeline, and it was not clear whether South Stream would ask for similar terms.

But Marcel Kramer, the chief executive of South Stream, said that requiring his project to open up pipelines to competitors would affect the project’s rate of return, and could make the project very difficult to carry out.

Mr. Kramer said he hoped the European Union and Russia could agree on a regulatory framework to give investors in South Stream an adequate return, but achieving that would be “hard work on the sides of all parties.”

He said South Stream could start commercial operations by December 2015, but called that goal “challenging.”

Speaking at the event, the E.U. energy commissioner, Günther Oettinger, pledged not to impose any “unreasonable or unjustifiable” obstacles on investment by South Stream. Even so, Mr. Oettinger said that E.U. energy investment rules should apply to South Stream.

Loosening any investment rules for Russian-led energy projects poses thorny questions for the Union. Europe needs additional supplies of natural gas to bolster its energy security. Yet some governments remain acutely concerned about deepening their dependence on powerful and prickly trading partners.

Dealing better with Russia became a priority after a dispute between Ukraine and Russia blocked natural gas supplies two years ago.

Article source: http://www.nytimes.com/2011/05/26/business/global/26pipeline.html?partner=rss&emc=rss

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