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19 May, 2009 17:07

Russian commitments to EU energy security undermined

Europe may fall short of 100 billion cubic meters of gas, if it creates obstacles to projects like Nord and South Stream, according to Gazprom’s Aleksandr Medvedev speaking at an energy conference in Berlin.

Bitter truth looked better than sweet lies to participants of the energy conference in Berlin when talking about Russia – EU energy relations. Gazprom’s deputy chairman Aleksandr Medvedev began his presentation warning there is no constructive dialogue between the two parties to solve current problems. And he added the EU was creating new obstacles for cooperation, after the European parliament recently adopted the so-called third energy package prohibiting energy producing companies from owning transportation assets in Europe.

“To destroy the possibility for vertically integrated companies to participate in all parts of the value chain could bring additional risks.”

If implemented, the package would create additional risks for projects, like Nordstream and South Stream, which are intended to diversify transit routes away from unreliable transit partners.

Wingas, Germany’s largest transport network operator and a shareholder in Nord Stream, hopes some amendments to the energy package are still possible, according to Managing Director, Rainer Seele.

“We have to ask for an exemption from regulation because we cannot accept an additional transit risk for our pipelines and we cant accept an economic risk.”

Despite possible obstacles, Russia’s pipeline projects remain highly attractive to those who are already investing in construction – as well as other new partners. Gaz de France has recently announced it will join Nord Stream, with Managing Director Jean-Marie Dauger highlighting the step towards an increased Franco-Russian gas partnership.

“We are one of the big users of Russian gas and I think it is important that we show that through our presence in the pipeline, it’s a contribution to the increase of our relationship with Russia as far as gas is concerned.”

For the first stage of construction, apart from shareholders money, NordStream plans to raise $3.5 billion on the international financial markets. The company hopes to finish the list of creditors by the third quarter this year.

On South Stream Gazprom plans to take the final investment decision in the first quarter of next year. Some estimates suggest EU gas needs may jump by 150 Billion cubic meters over the next two decades. That will require the combined output of Nord and South Stream. Both Russian and European energy companies at the Berlin forum once again called on EU governments not to create obstacles that would ultimately hurt consumers.