Europe seeks ways to cut dependency on Russian energy

Businessmen, experts and politicians from across Europe have gathered in the Lithuanian capital, Vilnius, to discuss ways to diversify energy supplies and reduce the bloc's dependency on gas and oil from Russia.

European concerns appear to be justified, as the continent gets large part of its natural gas from Russian energy major Gazprom.

The economies of the Baltic states are particularly vulnerable. If Gazprom were to increase its prices by 10 to 40 per cent next year, it's predicted that the Latvian economy could collapse.

Matthew Bryza from the U.S. State Department called for the diversification of the supplies to Europe using energy from Azerbaijan and possibly Kazakhstan.

The only way the EU can secure energy supplies from the East that bypass Russia is by extending the Odessa-Brody oil pipeline. Theoretically, this could pump Azerbaijani and Kazakh oil through Ukraine and Poland to the rest of Europe withour crossing Russian soil. An agreement to extend this pipeline was signed in Vilnius on Wednesday but it would take years to complete.

We're still using Russian crude oil by sea, because the Druzhba landline pipeline has been stopped. I believe at the negotiating table we can find a compromise

Gediminas Kirkilas, Lithuanian
Prime Minister

Also, question marks remain over the quality of Kazakh oil and the availability of the Azerbaijani “black gold”.

However, sources in Ukraine’s Foreign Ministry say Gazprom has already won the support of some EU countries for its own pipeline projects, like Nord Stream. Such support would undermine backing for the Odessa-Brody pipe.

Another suggestion for weaning some former Soviet states off Russian energy has ended in failure. Poland has rejected plans for a new nuclear plant to provide the Baltic States with power. Partners in the project refused to accept Polish demands for a third of the electricity generated by the new station.

The failure of this plan could be seen as bad news for Lithuania. An old Soviet-era nuclear power station will be switched off in 2009 leaving the country 100% dependent on energy deliveries from Russia.

RT's Business Today correspondent Daniel Bushell earlier asked Lithuanian Prime Minister Gediminas Kirkilas about Russia's role at the conference. He was in no doubt about Moscow's importance:

“Russia was invited at the highest level, we consider Russia as a partner in our energy policy, but many countries in the EU are trying to find alternative suppliers,” said Mr Kirkilas.

He went on to say that competition was central to EU policy on the supply and transit of energy:

“I think it's standard EU policy that all markets need to be quite competitive. It's much better that Russia takes part in this conference,” he added.

The Lithuanian Prime Minister went on to discuss Moscow's relationship with European energy consumers pointing out that “today we have extensive co-operation with Russia in the energy field, using more than 3 billion cubic meters of Russian gas.”

“We're still using Russian crude oil by sea, because the Druzhba landline pipeline has been stopped. I believe at the negotiating table we can find a compromise,” he said.