Russia may contest EU energy rules in WTO – source

Russia, on the brink of joining the World Trade Organization, is considering challenging EU energy regulations that would limit gas export monopoly Gazprom’s control over its European pipeline assets, a government source said on Wednesday.

WTO ministers are expected to invite Russia to join the global trade rules body in December after 18 years of on-off talks but, even before receiving their assent, a first row looks to be brewing.

Russia has expressed anger over European Union rules, known as the third energy package, that seek to liberalise the European gas market by forbidding suppliers from controlling the transport infrastructure used to deliver their gas.

“We believe that this package violates our bilateral agreements with the EU,” the official who spoke on condition of anonymity told Reuters. “We are now analysing whether WTO instruments can be used to protect our interests.”

“Politically for us the third energy package is a very unpleasant issue,” the source said.

Gazprom said Moscow was counting on the support of Germany to soften the resistance of Brussels to reforming energy market rules to exclude major pipelines such as the Nord Stream link that has just started operations.

“I think common sense will prevail,” Alexander Medvedev, head of Gazprom’s export business, told Germany and Austrian newspapers in an interview published on Wednesday.

“The question of the third energy package must be resolved by October of next year, otherwise we will not be able to meet our commitments.

“The Russian government has proposed removing the main pipelines from the energy package. We have received no answer. It is stupid to deny producers the opportunity to compete.”

ROBBERY

Prime Minister Vladimir Putin, set to become Russia’s next president next year, has called the third package “robbery”. Putin was due to discuss the matter with German energy firms later on Wednesday.

The European Union is Russia’s largest trade partner, accounting for about 50 percent of the country’s total trade turnover. Gazprom supplies a quarter of all natural gas consumed in Europe.

The EU would prefer to reduce its dependence on Russian gas. It ordered raids on Gazprom units in September to investigate suspicions of anti-competitive practices.

Gazprom, bound to its European customers through long-term contracts linked to oil prices, says massive transport infrastructure investments make no economic sense if it can’t benefit from them as an energy supplier.

Russia this month launched the 7.3 billion euro ($10 billion) Nord Stream pipeline across the Baltic Sea which would boost gas supplies to Europe and reduce the risk of supply disruptions from disputes with transit countries.

Nord Stream’s initial capacity is 27.5 billion cubic metres (bcm) per year, which will double when a second line opens in late 2012. Gazprom forecasts that its total exports to Europe will rise by 8 percent next year to 164 bcm.

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