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Saturday, May 06, 2006

Gazprom Energy Charter Disagreement

Martin Bartenstein, Economy Minister of Austria05–05–2006 KommersantThe European Union has for the first time acknowledged the possibility of Gazprom maintaining long-term bilateral contract with consumers in Europe. In a letter addressed to the Russian Minister of Industry and Energy Viktor Khristenko, EU Commissioner for Energy Andris Piebalgs and Austrian Minister of Economic Affairs and Labor Martin Bartenstein hint that the EU is ready to agree to Gazprom's monopoly on supplies of Central Asian gas, which they were not willing to do before. In exchange, they want a signature on the European Energy Charter. Gazprom sources say that that is impossible as the charter exists now.
A major source of disagreement between Gazprom and the EU is the EU's desire for Gazprom, after its present bilateral contracts expire, to sell its gas to traders at the border. Deputy chairman of the Gazprom management board Alexander Medvedev warned in the EU on April 25 that similar attempts at liberalization have proven erroneous. The conflict heated up on April 28, when European Commission chairman Jose Manuel Barroso appealed to the U.S. State Department for support, noting that "energy resources are gradually being turned into instruments of political pressure." Gazprom responded by once again stating the impermissibility of political forces intervening in commercial relations between companies. The letter to Khristenko admits the possibility of preserving bilateral contracts. On April 26, Bartenstein stated called the conflict "senseless," noting "only one outcome is possible. The Russians will go bankrupt because they depend on European finances in these relations, and we will freeze." Gazprom managers have reacted skeptically to the letter due to its demand that Russia sign the European Energy Charter, which is not in the interests of Gazprom. Gazprom execs have not seen the letter yet, and even the Ministry of Industry and Energy states that it has not yet received the letter, which is described on the EU's website.

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