EU pushes for liberalized gas market in Russia

Date: 13/05/04

EUROPE'S energy-intensive industries, including the fertilizer, chemicals and steel sectors, are awaiting the outcome of EU-Russia talks that could see Moscow agree to liberalize its gas market in exchange for membership of the World Trade Organization (WTO).

EU trade chief Pascal Lamy in a meeting in Paris today (13 May) with German Gref, Russia's trade minister, will seek to set the stage for a deal at the EU-Russia summit in Moscow on 21 May.

The EU's main complaint is that the Russian domestic price of natural gas is barely one-quarter of the price at which it exports gas to Europe.

"We want them to increase the energy price to at least the point of covering cost of production and a minimum profit margin," said Lamy's spokeswoman Arancha Gonzalez.

The idea would be to gradually increase gas prices for industrial users, but not for private households and public facilities, such as schools or hospitals.

Europe's fertilizer manufacturers warn that, if a deal is not reached before Russia joins, firms might mount a legal challenge via the WTO.

"We only have this one opportunity to rectify these unsustainably low gas costs," said Helmut Aldinger, director general of the European Fertilizer Manufacturers Association.

Gonzalez added that "most of the balls are in Russia's court on this one. It's not really a negotiation. It's about the entry price of Russia's accession tothe WTO".