ECONOMY

EU fears dependence on natural gas from Russia

The visit by Russian President Vladimir Putin to Athens last Monday stirred international interest in the decision regarding the Burgas-Alexandroupolis oil pipeline and the natural gas pipeline linking Turkey and Italy via Greece. On the issue of the oil pipeline, the US, said to have once opposed the project, welcomed it, saying that it would be good for competition and consumers. «The United States supports the development of alternative oil and gas sources and of a free market-based system that boosts competition among suppliers,» a State Department spokesman said. It is for these same reasons that the United States opposed the transport of Russian natural gas through the Turkey-Italy-Greece pipeline, currently under construction. «If this pipeline is filled with Russian gas because the Russians offer it to the Italians at a competitive price, it would be impossible to compete with Gazprom, the (Russian) company that already accounts for 80 percent of the European Union’s gas imports,» declared US Ambassador to Greece Charles Ries. European concern The Europeans are also concerned about a possible over-dependence on Gazprom and had already expressed these concerns at the time of the conflict between Russia and Ukraine over gas prices, early in 2006. These concerns are due to be repeated this week. According to sources, the chairmen of the top seven European natural gas firms along with Greece’s Public Gas Corporation (DEPA) – invited because of its involvement in the East-West networks – will meet in Brussels on Thursday to discuss the security of natural gas supplies. This private meeting will take place with the participation of European Energy Commissioner Andris Piebalgs and, quite possibly, of Commission President Jose Manuel Barroso. The meeting’s conclusions and likely proposals will be discussed by the European Council of Energy Ministers next month and at the year-end summit meeting of government leaders. Thursday’s meeting was fixed about a month ago: The precipitating event was the August 7 strategic cooperation agreement between Gazprom and Sonatrach, Algeria’s state natural gas company. The deal, whose details remain secret, raised fears of higher gas prices in Europe and was considered a blow to the EU’s supplier diversification strategy. The security of the EU’s gas imports depends on using a variety of suppliers and supply routes. The Europeans had already made supplier diversification a priority but the Russia-Ukrain conflict brought home the need for alternative supply routes as well. Russia and Gazprom were quick to seize on that conflict to propose feeding Russian gas into the projected Turkey-Italy pipeline. Gazprom’s managing director, Alexei Miller, traveled to Greece and Italy to put the proposal on the table and Putin himself raised the matter with Prime Minister Costas Karamanlis last week. According to sources, Putin called on Karamanlis to persuade his European colleagues of the necessity of transporting Russian natural gas via this route. When complete, the Turkey-Italy pipeline will begin at Karacabey, on the Asian coast of the Dardanelles straits, cross into eastern Thrace, into Greece, and join the existing Greek gas network at Komotini. Westward extension will reach the Adriatic Sea, ending in the Italian town of Lecce. The Karacabey-Komotini section is already under construction, while the Greece-Italy section is still under study. The project was first considered seven years ago, with encouragement from both the EU and the US. It was designed to bring gas from Azerbaijan into Western Europe to lessen dependence on Russian gas. However, European demand for gas is constantly increasing. Ukraine has proven a questionable transit option and Azeri gas will not be available before 2011. Russia wants to take advantage of this, offering very competitive prices. Europeans are understandably skeptical about a proposal that would defeat the purpose of the pipeline’s construction.