EU-Russia gas battles ‘only beginning’, says report

With Gazprom actively seeking stakes in the European and particuarly the German energy market, a new report warns about a ‘clash of agendas’ between the EU and Russia that will increasingly undermine the security of Europe’s energy supply.

“While the EU is challenged by issues related to gas supply, Russia is fighting the challenges related to access to the market. This clash of agendas is threatening Europe’s security of supply”, says the European Energy Markets Observatory 2007, published by the consultancy Capgemini.

The report points to increased efforts by Gazprom, Russia’s state-owned energy giant, to gain “control of the whole value chain” of the EU’s energy supply, citing a number of new gas infrastructure projects and important pipeline ventures agreed jointly with Germany’s E.ON and Italy’s ENI. 

Alexander Medvedev, Deputy Chairman of Gazprom’s Management Committee, seemed to confirm the trend. In an interview with the Frankfurter Allgemeine Zeitung (FAZ), Medvedev said that his firm is planning several new important projects in Germany, including a large gas-fired power plant in the north of the country, to be built as a joint venture with E.ON. 

But a recent Commission proposal to introduce a ‘reciprocity clause’ that prevents vertically-integrated foreign energy firms, and notably Gazprom, from gaining a controlling share in EU energy distribution networks sets the stage for a future clash between the EU and Russia, according to the Capgemini report. 

“With divergent strategies, one can easily predict that the EU/Russia battle for gas supply and value chain control is only starting”, it says. 

The EU’s dependancy on Russian gas is increasing steadily, and is expected to go from 25% (the current level of dependency) to 50% by 2030, according to the Commission. 

Colette Lewiner, one of the authors of the report, told Reuters that the planned construction in Europe of numerous new fossil fuel power plants, most of which rely on imports of oil, coal or gas (notably from Russia), is incoherent with respect to the EU’s objective of increasing supply security while decreasing CO2 emissions.

The publication of the report coincides with the World Energy Congress taking place in Rome this week (11-15 November). 

In his opening speech to the Congress, EU Commission President José Manuel Barroso said that a “genuine single European energy market will continue to be open to our partners around the world, as long as they play by the same rules as our companies. In other words, we will protect competition in our newly-liberalised market”.

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