Brussels, 23/10/2006 (Agence Europe) - Russian President Vladimir Putin confirmed in Lahti on 20 October that Russia was ready to share the same basic principles as the EU and the same approach on energy cooperation. He also indicated that Moscow was not against the idea of incorporating the principles of the Energy Charter into the new “strategic partnership” agreement with the EU. Speaking to press after the dinner he had just shared with EU heads of state and government at the end of the informal European Council in Lahti (see EUROPE 9291), Mr Putin spoke of a “convergence of views” between the EU and Russia on the fact that any future energy cooperation had to be based on the “predictability of energy markets”, “mutual dependence between suppliers an customers” and “protection of the vital energy infrastructure”. “We are not against the principles laid down in the Energy Charter, but we believe that certain provisions need to be further specified, or a different document needs to be developed on the basis of the same principles as the Energy Charter,” he said, referring to the new framework agreement which the EU and Russia want to negotiate in 2007 and which will take over from the current Partnership and Cooperation Agreement (PCA) which is due to run out next year, after ten years. “Following today's meeting, I am confident that we can agree on a common approach with our European partners,” an approach which will be incorporated into the new EU-Russia agreement, said Mr Putin.
Given their “mutual dependence”, Russia and the EU were “natural (energy) partners”, he went on, stating that in terms of economic and trade relations in general, Russia was more dependent on the EU today than the other way round. This mutual dependence created a good starting point to get closer in other areas.
Earlier, opening the joint press conference with Mr Putin, the President of the European Council Matti Vanhanen reiterated the EU's desire that the future energy partnership with Russia be founded not only on the principles set out in the Energy Charter Treaty, but that these basic rules -market opening, fair and non-discriminatory access to transit networks, convergence of competition, safety and security rules - also form part of the “legally binding” agreement that the future EU-Russia agreement had to be. “The Union is aiming at building a close and legally binding partnership with Russia on mutually balanced, long-term benefits,” he said.
There was agreement between Russia and the EU on the basic principles for energy cooperation and to ensure energy security, “but now we have to turn these principles into practice,” acknowledged European Commission President José Manuel Barroso. “The EU wants Russia as a predictable and secure energy supplier. Of course, Russia is also looking for predictability from the EU,” he said. The EU needed Russia as much as Russia needed the EU, he stressed. “We want our relationship with Russia to deepen. To achieve this we need to develop mutual trust. That requires transparency, rule of law, reciprocity and non-discrimination, along with market opening ands market access. This applies, of course, to energy, but not just energy,” he said. Energy was a strategic issue and had to be a “key element” in the future framework agreement with Russia, he went on. He warned against politicisation and dramatisation of the energy issue. “The best way to avoid over-politicisation, a dramatisation of the” the energy issues, is precisely to implement well-established principles of the market. In the long run, that's precisely what can consolidate trust. … We should not allow energy to divide Europe and Russia as Communism once did,” Mr Barroso stressed.
More generally, Mr Putin told press of his determination to build “a solid and mutually beneficial relationship rooted in common values” with the EU. He said the future EU-Russia agreement should be called a “Strategic Partnership Agreement”. From the EU side, it was stated that there was as yet no precise thought as to what the agreement should be called. (hb)
Sakhalin II ands Shtokman energy projects - Putin gives explanations
Re-stating his desire to build long-term relations rooted in shared values with Europeans, the Russian President said that Moscow was doing all it could to give investors guarantees through a series of Bills going through the Duma. There was a whole package of Bills being looked at in the Duma to ensure foreign investors' ownership rights in the Russian economy and to reduce the number of sectors where foreign capital could not be used, Mr Putin said. He also indicated that he was sure a solution could be found to the disagreements over Royal Dutch Shell's Sakhalin II gas and oil extraction project in Eastern Siberia.
Criticising the companies involved in the project (Japanese companies Mitsui and Mitsubishi have a 45% stake) for failing to respect the country's environmental standards, Moscow decided in September to review Shell's permit to exploit the resources. Questioned by press, Mr Putin, referring to the decision by the American Congress to ban BP from exploration in Alaska on environmental grounds, said that for Russia it was, first and foremost, a matter “ensuring that environmental requirements were fully met”. “Until now, no one has been banned from anything,” Mr Putin added, however, pointing out that “foreign investment in the Russian economy, especially in the energy sector, continues to increase and now amounts to tens of billions of dollars”. Apart from ecological issues, Mr Putin also spoke about economic issues hindering the completion of the project. He said in particular that, under current arrangements, Russia would not receive a high enough share of profits. “Our partners wanted to double their costs. What it boils down to is that, under the production-sharing agreements, Russia will not see any profits until all the costs have been recouped. We haven't seen any profits so far even though oil has been produced for a number of years, and that could continue,” he said, indicating that “foreign staff salaries have been almost doubled”. He also said that not enough Russian labour, was being used. “Under the agreement, there should be 70% use of Russian labour, material and equipment. In reality, it doesn't even come to 50%,” he complained, sure, nonetheless that “these issues are not insoluble” and that it was just a matter of “getting round the negotiating table to reach agreement”.
Speaking about the lack of sufficiently valuable shares offered in compensation by Western companies, Mr Putin also explained that, in the Shtokman project in the Barents Sea, Gazprom decided to be the sole developer of these vast gas deposits which will supply the future Germano-Russian gas pipeline. The decision by Gazprom to operate as sole developer “has nothing to do with changed rules of operation in Russia,” Mr Putin said going on, “Gazprom declared its intent to involve foreign partners. Foreign partners tabled a proposal. Gazprom analysed the proposal and decided they were not happy with it, because what was involved was the exchange of shares and nobody could offer adequate shares because Shtokman is a very large deposit. So Gasprom declared it would be the sole developer, but that does not mean that Russia rejects cooperation with foreign partners. They can be involved as co-executors, to solve management issues as well as technical implementation,” he concluded. (eh)