European Union energy companies court Moscow
Their ties with Kremlin-backed Gazprom are vexing EU efforts to create an energy security policy that would lessen dependence on Russia.
from the June 21, 2007 edition
Page 2 of 3
A call for more deals with Gazprom
Last month, officials from E.ON, Gas de France, Eni of Italy and others joined Gazprom at the Russian House of Science and Culture here for an energy conference – less than a week after an EU-Russia summit collapsed in part over differences on energy policy. At the conference, executives called for a thaw in EU-Russian relations and said more dealings, not fewer, with Gazprom are the key to energy security.
The relationship between Gazprom and different European energy companies often goes deeper than simple supply contracts (see box).
In a prearranged deal, Eni bid this spring on behalf of Gazprom when valuable assets of the now-defunct Russian energy company Yukos went on auction. After selling Yukos assets to Gazprom, Eni was granted access to Gazprom's gas fields.
Gazprom produces 90 percent of Russia's natural gas and owns most of its pipelines. Europe gets 25 to 40 percent of its natural gas from Russia, a figure that could double two decades from now, according to Fariborz Ghadar, director of the Center for Global Business Studies at Penn State University.
Brussels has scrambled to address this dependence following two consecutive winters that saw Russia briefly disrupt energy supplies to Europe during price rows with Ukraine and Belarus. But to date, Brussels's only concrete answer to Moscow's energy dominance is the EU's planned $6 billion Nabucco pipeline, which could begin pumping gas by 2012 from Central Asia via Turkey to Austria.
But even those plans are uncertain: Russia made key gas deals in Central Asia last month, and several of the energy companies behind Nabucco, including Hungary's state gas company, MOL, have close dealings with Gazprom.
Brussels has pushed for Europe to open its markets and create more competition, says Friedemann Müller of the German Institute for International and Security Affairs. "But does Gazprom in this market mean more competition?" he asks. "There are doubts, of course, because it acts as a monopolist."
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