Diversification possible. Coincidence had it that on the very day that I voiced the opinion that various reactions to the agreement between Russia and Algeria over natural gas were somewhat excessive (see this column yesterday), the president of the Italian electrical energy organisation (ENEL), Fulvio Conti, was in Brussels for talks with partners including the European Commission. I asked him his opinion. He replied as follows: "The Gazprom-Sonatrach agreement only came as a surprise to people who were not active in this field. When big suppliers get together to coordinate certain things, you can see this coming. What is surprising, however, is the lack of preparation on the part of Europe". Mr Conti logically stressed the situation in his country, where electricity production is 70% dependent on gas. It is vitally important to diversify the sources, and the means to do this exist: coal (and it has become possible to do this ecologically correctly), biomass (which offers a broad range of possibilities to the advantage of agriculture) and also, in his opinion, nuclear power. But within the "natural gas" solution, the sources of supply can be diversified, as long as Italy no longer has to depend solely on the two current gas pipelines: one for Russian gas (coming via Austria), the other for Algerian gas (coming via the sea). If the appropriate installations are built, gas from Egypt, Nigeria, Qatar and various other States of the former USSR can be shipped in liquid form and then returned to its gaseous state. And, in any case, energy cooperation with Russia must be reinforced and developed. Mr Conti sees ENEL's experiences as extremely positive: the management of an electric power station in St Petersburg (in partnership with ESN Energo) and the purchase of 49.5% of RusEnergoSbyt's shares.
Useful considerations. The experience of ENEL and other Western companies in Russia confirms a few general considerations which I have already touched upon in this column:
a) Vladimir Putin is effectively leaning towards a certain opening-up of the Russian market, not out of kindness but out of sheer necessity: Western capital and technology are vital to the energy sector of his country. He is calling for reciprocity, by which he means the right for Russian companies to become active on the European market, to acquire stakes in European businesses, possibly to launch takeover bids, and so on. The limits of these operations must be clearly defined from the European side (see point d);
b) this double movement of cooperation and partial interpenetration will bring about a mutual dependency which will, notwithstanding unforeseeable disaster, oblige Russia to respect its commitments and contracts for the supply of gas and oil. This is one of the positive aspects of cooperation;
c) however, the energy market will never be completely open. The Russian authorities will continue to define the framework and to take the central decisions. By this I mean: Russia will never ratify (or at least not in the foreseeable future) the energy Charter with the legal constraints this brings with it (such as freedom of access, for Western companies, to Gazprom's transport network to export the gas which they will buy, or even produce, in Russia itself); the agreement with Sonatrach was personally negotiated by Mr Putin; the Italian companies setting up on Russian soil were the subject of a political declaration by Mr Putin and Mr Prodi (in this political framework, sometime ago the Gazprom-ENI cooperation agreement, covering the whole of the production chain, was announced, and even an option for Gazprom directly to distribute a proportion of its gas in Italy);
d) similarly, the Member States' authorities will have to keep control of operations by Russian companies in the EU, and the policies to be followed will have to be laid down at European level. The Russians are anything but naive; and nor should the European be. The principles of the energy Charter should either apply to everyone, or be binding to no one. And the individual interests of such and such a company should never take precedence over national interests, or over European interests defined as a whole. Whilst recognising the autonomy of the Member States in certain areas, only by acting at European level will it be possible to conduct a proper peer negotiation in the interests of all.
If these principles are respected, it will allow the EU and its Member States to enter the forthcoming discussions on energy with full confidence: first with Mr Putin, who has been invited to the informal European Council of 20 October, which will be given over mainly to the energy dossier; and secondly, at the EU-Russia Summit of November; and then, in the framework of negotiations on the planned strategic partnership agreement.
(F.R.)