International Herald Tribune
Judy Dempsey
Tuesday, December 12, 2006
“We will not ratify the energy charter,” the adviser, Sergei Yastrzhembsky, Putin’s special envoy to the European Union, told a small group of reporters Monday night. “It would be damaging for Russia if we ratified it.”
Energy analysts said Putin was determined to prevent any kind of third- party access to the pipelines because it would lead to competition.
“A few years ago, Russia was about to ratify the energy charter, but then came the big jump in energy prices,” said Iwona Wisniewska, an expert on Russian energy at the Center for Eastern Studies in Warsaw. “Today, the transit protocol is very problematic for Russia. It would mean competition for Russia’s state-owned energy monopolies. The monopolies would shrink.”
Russia’s insistence that it will not ratify a set of common rules giving European and other foreign companies access to the pipelines could pose the first challenge for Chancellor Angela Merkel when Germany takes over the EU’s rotating presidency on Jan. 1. Russia, energy security, global warming and the Middle East will dominate her foreign policy agenda.
Merkel said Tuesday that she would like Russia to ratify the 1994 energy charter. “But wanting it to do so and hoping it will do so are two different things,” she said at a presentation of Germany’s program for the EU presidency to the foreign news media.
During Germany’s six-month presidency, Merkel will be faced with trying to persuade Russia to ratify the energy charter as well as negotiating a new EU economic and trade accord with Moscow. Berlin will be chairman of the G-8 group of industrialized countries during the same period.
The trade accord is supposed to replace the Partnership and Cooperation Agreement that expires next year. Finland, current holder of the EU presidency, had hoped to start formal negotiations last month. But Poland blocked them, insisting that Russia first lift its embargo on imports of Polish meat.
Russia wants the new accord with the EU to focus more on technical and economic issues rather than specific items addressing human rights and the rule of law, according to experts involved in drafting a new accord.
The Kremlin also wants only general references to energy security and no mention at all of the EU’s energy charter, which Russia signed but never ratified in the late 1990s before the rapid rise in energy prices.
The European Commission, the EU’s executive, said the goal of the charter was to establish a set of common rules for the trading and transit of energy across Europe as well as energy efficiency. “The European Commission is in favor of the ratification by Russia of the EU energy charter,” said Ferran Tarradellas i Espuny, spokesman for the energy commissioner, Andris Piebalgs. “It would be positive for both parties to have a stable, legally binding set of rules.”
Despite years of erratic negotiations, the commission said Tuesday that it would continue to persist. “We are still eager to get Russia to ratify the treaty,” Tarradellas i Espuny said.
Without Russia’s ratification, the charter would be severely weakened because Russia is one of Europe’s most important suppliers of gas as well as one of the biggest transit providers for other forms of energy. Over a quarter of the EU’s energy needs and a third of Germany’s are supplied by Russia.
One of Russia’s main objections to the charter is the transit protocol, which discusses how foreign energy companies could obtain “third-party access.” In practice, third-party access would allow companies to use Russia’s pipeline network to transport, for example, gas purchased in Central Asia via Russia to markets in Europe.
At the moment, the only way companies can deliver gas to Europe is by selling it to Russia, which then transports it to Europe. An alternative would be to construct costly new pipelines that would bypass Russia by crossing some Central Asian countries and terminating in Turkey.
Several EU countries, particularly the new member states of Eastern Europe, say the charter is also about reciprocity. “While Russia stops foreign companies from gaining access to the energy grids, Gazprom is not stopped from distributing its gas in EU countries,” Wisniewska said. “Where is the reciprocity?”
Yastrzhembsky, who was in Berlin to discuss Germany’s EU and G-8 presidency with officials of the Chancellery and the Foreign Ministry, said Russia would never give up control of its pipelines.
Yastrzhembsky’s statement coincides with increasing pressure from the Kremlin on foreign energy companies to reduce their stakes in Russia’s energy sector.
After months of pressure from Russian regulatory officials, Royal Dutch- Shell this week offered a stake in its $20 billion Sakhalin Island project to Gazprom, the state-owned energy monopoly, in what was seen as a further sign of the Kremlin’s efforts to tighten its control of the oil industry.
In October, Gazprom reversed a major policy decision by announcing that it would develop the Shtokman gas fields without any foreign investors. The Shtokman fields have reserves estimated at 3.7 trillion cubic meters of gas. Until October, Gazprom had a controlling stake of 51 percent, while the remaining 49 percent was to have been divided among two or three foreign energy companies.
