EU Nations Urge Energy Pact With Russia

EU Nations Urge Energy Pact With Russia

Published: 3/14/06, 10:26 AM EDT
BRUSSELS, Belgium (AP) - European Union energy ministers called Tuesday for a new energy pact with Russia to guarantee Europe's supply of natural gas and oil, just months after a price dispute between Russia and Ukraine temporarily turned off Europe's gas.

"Russia in the future is going to be a strategic supply of gas and oil so we need to have a proper long-term sustainable relationship," said Austrian Energy Minister Martin Bartenstein, who led the meeting. "Ideally we would want to avoid the sort of things that happened at the beginning of this year or at least diffuse them quickly."

Ministers agreed to try to use more diverse energy suppliers and transport routes to avoid supply bottlenecks and also said they should speed up building pipelines from Russia and the Mediterranean region.

High oil prices and Europe's growing reliance on imported energy led the EU to call for governments to consider dropping separate national policies in favor of a joint European approach to energy.

Europe imports 50 percent of its energy needs, making it the world's largest importer and second-largest consumer of energy. This is expected to rise to 70 percent by 2030 unless Europe cuts demand and develops alternative supplies at home.

EU energy demand is forecast to rise by 1 percent to 2 percent a year, with fossil-fuel use rising to almost 90 percent of the total energy supply.

"Ministers are now clearly facing these issues," Bartenstein said. "I really believe we don't need any more blackouts or disruption of supply to convince them that it is necessary."

He said governments would be "well-advised" to keep gas stocks to add to the oil they already stockpile for time of crisis.

Speaking with one voice on energy issues abroad with either supplier or consumer nations received stronger support than measures to improve Europe's fractured energy markets.

Several European countries - Spain, Portugal and Luxembourg - have failed to open up their energy markets and EU antitrust officials have warned that there are serious competition problems as old monopolies dominate the energy sector, charging prices that are too high.

The EU executive insists that Europe's energy markets - still dominated by old monopolies - have to be fully liberalized by July 2007, saying this will bring down prices. EU Competition Commissioner Neelie Kroes warned ministers she would act against any violations of antitrust rules.

But support for more fundamental changes to the European energy business - such as the creation of a single European energy regulator to replace national agencies - was, at best, lukewarm.

Ministers met to discuss the range of options for Europe's future energy needs put forward by the European Commission. European leaders will look at the issue at a meeting on March 23-24.

The energy meeting did not debate French and Spanish moves to protect national energy companies from foreign takeovers.

Governments agreed they could cut energy use by 20 percent by 2020 and supported a general push for renewable energy and other measures to cut down on the fumes that cause climate change.

Barroso last week urged Europe to stop thinking of energy strategy as a national issue, saying it needed to be dealt with at the European level with a strong integrated internal market replacing 25 different "mini-markets."

Environment group Greenpeace said it was "encouraging" to see the EU giving higher priority to renewable energy. "But good declarations are no substitute for action: it is now over two years since all the EU institutions flagged the need for renewable energy targets for 2020. It is about time that we move ... to concrete, binding measures," said Mahi Sideridou, Greenpeace's EU policy director for climate and energy.

European countries need to decide where their energy will come from in future. Some 1 trillion euros ($1.19 trillion) will be spent upgrading and replacing electricity generation plants and energy infrastructure over the next 20 years, the Commission says.
credit BellSOuth