EU, Russia to explore ‘reciprocity’ in energy trade

A joint EU-Russia expert group was announced in Brussels yesterday (16 October) to discuss a ‘reciprocity clause’ included in the Commission’s September energy liberalisation proposals. The clause, which has caused anger in Moscow, would block Gazprom and other foreign investors from acquiring energy assets in Europe if their countries do not open up their own markets in return.

EU Energy Commissioner Andris Piebalgs and Russian Energy Minister Victor Krishtenko held a meeting in Brussels on 16 October to discuss the strained relations between the two blocs on energy. The meeting took place ahead of an EU-Russia summit on 23 October where energy once again looks set to dominate the agenda.

• ‘Reciprocity clause’ for energy investments

A special expert group composed of EU and Russian representatives was set up at the meeting to discuss the Commission’s ‘reciprocity clause’ included in its 19 September proposals on energy liberalisation.

At a joint press conference in Brussels, Piebalgs characterised the talks as “frank and successful” and Krishtenko reiterated Moscow’s commitment to EU gas supply security.

Krishtenko said his government will await the outcome of discussions before taking an official position on the proposal. He added that Moscow is “very interested” in taking part in the discussions and “enriching” the talks.

Russia has already unbundled its electricity sector, but its gas firms, notably Gazprom, remain vertically integrated and closely connected with the Russian state.

In the absence of a formal position from his government, Krishtenko expressed his “personal view as an engineer”, which included “some doubts” that electricity and gas network unbundling should be dealt with in the same way. Gas and electricity infrastructures function differently, he said, and are governed by different market mechanisms and investment decisions, including long-term contracts.

• New ‘early warning’ system?

In response to questions from reporters, Krishtenko pointed to the possible creation of a two-phase early warning system between the EU and Russia.

One phase would function as a mechanism for information exchange on new legislation and long-term risks and opportunities. Moscow, for instance, did not hide its surprise when the Commission’s reciprocity proposal was published.

The other would be designed for information sharing on short-term “significant issues which could give rise to difficulties”, Krishtenko said. Concerns in Europe were raised particularly during the January 2006 gas dispute with Ukraine, which saw Moscow briefly interrupt supplies to Europe.

When asked about a possible repeat of gas supply cuts in the coming winter, Krishtenko said that “no hindrances are foreseen”, but added, in a likely reference to Ukraine, that there can be no “exclusion of periodical risks which can arise in terms of transit countries”.

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