Gazprom looms large on EU’s gas supply horizon

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Russian energy giant Gazprom has secured further pipeline deals with individual EU member states and announced its ambition to move into the UK market this week, casting further doubts over the EU’s ambition to “speak with one voice” on external energy matters.

Russia’s state-owned energy giant Gazprom, believed by many to be an extension of the Kremlin that is being increasingly used for political leveraging, made international headlines this week (28 January) with its intention to acquire 15% of the UK gas market by 2011, a tenfold increase compared with current holdings. 

The move would allow Gazprom to provide gas directly to UK consumers, reflecting the company’s wish to become a powerful actor in the EU’s energy market rather than a mere external gas supplier, an ambition that may be complicated by Brussels’ plans to demand ‘reciprocal‘ treatment for EU firms with similar ambitions in Russia’s energy market.

In separate deals concluded on 25 January, Gazprom also acquired the entire Serbian oil and gas sectors, as well as a 50% stake in the Central Europe Gas Hub through a deal with Austria’s OMV. The latter deal brings Gazprom one step closer to realising the ‘South Stream’ pipeline project, a direct competitor to the Nabucco pipeline project. Nabucco is a showcase ‘European’ pipeline deal that continues to face obstacles despite recent pledges for financial backing by Germany and France (EURACTIV 17/09/07).  

Meanwhile, EU Energy Commissioner Andris Piebalgs on 29 January defended the controversial Nord Stream pipeline as a “project of European interest”. 

In addition to concerns about the environmental impact of the pipeline, which would bring Russian gas directly into Germany via the Baltic seabed, Poland and the Baltic states have expressed their frustrations about being bypassed by the project and have proposed an alternative land route. 

Ukrainian Prime Minister Yulia Tymoshenko also chimed into the EU’s gas supply debate during a visit to Brussels on 29 January. Tymoshenko informed journalists about her country’s intention to seek closer energy ties with the EU and revise a current pricing agreement with Gazprom in order to secure higher transit and gas storage fees in response to higher gas prices.

However, there are concerns that the move may upset the stability of Europe’s gas supplies, as the agreement on low transit fees was part of a 2006 deal with Gazprom that signalled the end of controversial gas supply disruptions (EURACTIV 05/01/06). 

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