Europe's three largest gas companies called Wednesday for greater political support for increased business ties with the Russian energy giant Gazprom, saying growing tensions between Moscow and the European Union should not be allowed to jeopardize energy security.
The blunt assessment from Eni of Italy, Gaz de France and E.ON Ruhrgas of Germany came as the Russian president, Vladimir Putin, arrived in Vienna for a state visit a week after the collapse of an EU-Russia summit meeting. Putin raised the energy issue himself, praising Austria as a model partner, but failed to win support for setting aside political differences.
As EU and Russian leaders continue to disagree, the bloc's big energy companies are making their own deals with Gazprom. With Russia as Europe's most important supplier of natural gas - demand for which is expected to rise sharply over the coming 10 years - officials at an energy conference in Berlin, sponsored by the Russian Gas Society said both sides had an interest in increasing energy security.
"It is about long term contracts, infrastructure joint ventures and asset swaps," said Uwe Fip, senior vice president of E.ON Rurhgas.
Edouard Sauvage, vice president of the supply division of Gaz de France, said the strategy toward Russia was to have reliable and secure contracts for energy delivery.
Russia is our neighbor," said Jean-Marie Devos, secretary general of Eurogas, the agency that represents the industry. "We should take energy on its own merits and not let the political climate affect it."
E.ON Ruhrgas, the only non-Russian company to have a seat on Gazprom's board, is part of the Russian-German consortium building the €9 billion, or $12.1 billion, North European Gas Pipeline, which will allow Russia to bypass Poland by sending gas to Europe under the Baltic Sea.
This project "needs political support otherwise no one will take the risk," Fip said.
Eni this year concluded a major contract with Gazprom that involves long-term gas supply contracts, distribution and production deals.
"International and national companies must work together," said Domenico Dispenza, chief operating officer of Eni.
His remarks reflected growing concern by companies attending the conference over the deteriorating relations between Russia and the European Union. The two sides are at loggerheads over issues ranging from Putin's clampdown on human rights and press freedom to Russia's refusal to endorse a UN plan that would grant Kosovo independence from Serbia.
Putin's state visit to Austria was focused on bilateral trade and investments, both of which are thriving.
"Around one-third of Russian gas goes through the Austrian territory," Putin said, according to Reuters. "This is our contribution to the European energy security."
But he failed to win support on any of the issues that caused the EU-Russian summit meeting to fail last week in the Russian city of Samara.
"There are some issues where the EU and Russia have a need for discussion," Austria's president, Heinz Fischer, told Putin. "We are not a country that is veering out of the European solidarity."
Putin also lashed out at the Bush administration's plans to deploy part of an antimissile defense system in Poland and the Czech Republic, once satellites of the Soviet Union. Putin has said the shield would threaten Russia and could even lead to a new arms race.
"What has happened that has worsened the situation in Europe and demands such actions? Nothing," he said, according to Reuters.
American officials have said the missile defense shield was important for protecting Europeans from possible missile attacks from Iran.
In Berlin, Vladimir Kotenev, Russia's ambassador to Germany, opened the energy conference with a scathing attack on what he termed anti-Russian media coverage in countries like Poland and Germany.
"It is coverage which is negative for the overall development for business," Kotenev said. "No matter what Russia does, it is always given a negative assessment."
The EU is Russia's largest trading partner, with 30 percent of its oil imports coming from Russia and 50 percent of its gas imports, according to the European Commission.
But some European governments, particularly Poland and the Baltic states, say Russia is using its energy as a political weapon. In particularly, they have repeatedly criticized the German-led plans for the trans-Baltic pipeline, which they claim will make EU members to the east more vulnerable to Russian pressure.
Kotenev dismissed such worries.
"The business community knows that gas is not a weapon in order to threaten Europe, which the media say," he said.
For its part, Eni has extended its contracts with Gazprom until 2035, while Gazprom this year will be able to enter the Italian gas distribution market through Eni's pipelines.
Sergei Chelpanov, deputy director of Gazprom's export division, said the company would be selling up to three billion cubic meters a year by 2010, and Eni would obtain a stake in exploration and production in a Gazprom gas field. Both companies also agreed to the joint development of liquefied natural gas.
E.ON Ruhrgas and Gazprom are negotiating asset swaps that will give the German company access to a production field in Russia in return for Gazprom buying some of its assets in Hungary.
Gaz de France, too, recently signed long-term supply contracts with Gazprom. Sauvage said such certainty over gas supplies, "enables cost intensive projects to be finished and guarantees the security of supply."
As part of that deal, Gaz de France agreed to give Gazprom access to its distribution network whereby it will start selling gas directly to industrial customers later this year.
(International Herald Tribune, 23/05/2007)