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17 Jul, 2007 02:02

Energy reciprocity stirs EU row

European companies should be given access to gas production in any country that wants access to Europe's downstream market, according to how the European Parliament defines the 'principle of reciprocity' in its latest resolution.

Last week, media reports claimed the recommendation could prompt the European Commission to change its energy legislation. But Gunter Verheugen, Vice President of the European Commission, denied such speculation during a conference on reducing trade barriers, where he met with Russia's Minister of Energy and Industry, Viktor Khristenko.

“It's an initiative that doesn't exist. It's an initiative is not planned. You might have seen something in the European Parliament. If I am not mistaken, it was one member of the European Parliament. I don't know who he is,” Mr Verheugen said.

The right of initiative comes exclusively from the European Commission. The Parliament doesn't have the right of initiative. He can say what he wants. But it has no effect. If the Commission doesn't make a proposal, nothing will happen. And this proposal is not intended. I don't even know what he means.

Gunter Verheugen,
Vice President
European Commission

The man he was referrring to is Alejo Vidal Quadras, the Head of the Committee on Industry and Energy Development.

But analysts say the vague language of the document stems from the complex nature of the issue itself. Chris Weafer, chief analyst of Alfa Bank, says the reaction of the Vice President of the European Commission also reflects its disagreement with the European Parliament.

“The European Commission obviously wants to find some pragmatic resolution to respond to Russia Shtockman case with something on the trade side. The European Parliament is very much rooted in politics. That I think is the reason there is no clarity yet. I would guess it will be a couple of months before we see the skeleton of this deal emerging,” Mr Weafer believes.

The European Commission is set up to act as independent body. Members of the Parliament, on the other hand, represent the interests of their countries, some of which are concerned about Gazprom's export monopoly. The situation is further confused in their eyes by different outcomes achieved by energy majors in their dealings with Russia.

Both sides seem to be giving mixed signals, but they will have to come to agreement sooner or later as their energy relationship is interdependent.