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27 Jun, 2008 13:50

Pipeline access could block new Russia-EU deal

The first round of talks over a new Partnership and Co-operation Agreement between Russia and the EU will start in July. But there are a number of unresolved issues, including the Energy Charter Treaty.

The energy treaty dates back to the 1990s and was originally intended to integrate the energy sectors of the former Soviet Union and Eastern Europe into the broader European and world markets at the end of the Cold War. The international agreement came into effect in 1998.

Russia signed the treaty in 1994, but refused to ratify it. The main objection was giving third-party access to Russia's pipeline infrastructure and transit fees.

Aleksandr Razuvaev, an analyst from Sobinbank, suggests Russia is unlikely ever to sign the document.

“The state is controlling oil transportation via Transneft and gas transportation through Gazprom. Foreign companies will never get free access to Russia's strategic fields. I think the European Union's demands are absurd and Russia will always use its natural resources and its transport system, i.e. transit possibilities, only in its own interests,” Razuvaev said.  

However, Ralf Dickel from Energy Charter Secretariat, says the agreement is not restrictive and open for any kind of transit model.

“It could be a model where energy is bought and resold. It's not a specific model for how you build pipelines and use them, it's just a basic philosophy that a transit country should not stand in the way of mobilising energy resources from one country to a market where they're needed,” he said.

The dispute has dragged on for many years and boils down to energy security. With the need to negotiate a new partnership agreement between Russia and the EU, the pressure is on to resolve the issue. A new EU-Russia agreement is expected to be ready in a year.