Plan to expand Mediterranean energy sector

Date: 06/06/1996

By Elizabeth Wise

EU energy ministers will meet their counterparts from a dozen North African and Middle Eastern nations this weekend to discuss plans for an energy bloc encompassing the Mediterranean region.

The 7-9 June meeting in Trieste is part of an ongoing drive to make the area attractive to investors and operators in the energy sector, with investment-friendly legislation, laws to encourage joint ventures and an infrastructure conducive to expanding the sector.

At a meeting in February, EU ministers discussed restructuring the sector to open it up to private investors and competition in energy production.

In Trieste, they will study economic and financial options to encourage investment in

the energy resources on the southern and eastern banks of the Mediterranean.

One idea floated in February was to create a guarantee fund for private investors. At Trieste, ministers will consider creating gas and electricity link-ups based on the model of the EU's Trans-European networks, as well as possible financing measures for such projects.

European ministers will also encourage their Mediterranean counterparts to sign up to the European Energy Charter and discuss how to bring them into the 48-nation group dedicated

to pan-European cooperation, creating a free market in energy, efficiency of use and supply, and protection of the environment.

In addition, the ministers will discuss the possible creation of a Euro-Med energy forum where government and private industry could exchange information.

Stressing that the oil and gas deposits in the Mediterranean were the closest source of supply for the EU, the Commission last month set out an energy sector strategy which “seeks precisely to create the conditions for exploitation” of the region's huge energy reserves.

The Commission maintains that they are not being fully exploited currently because of obstacles to investment and the lack of investment security, as well as political instability.

A conference in Cairo last September estimated it would take 192-billion-ecu worth of investments over the next 25 years to shore up the region's production, transport and distribution infrastructures.

The energy sector has been a key element of the Euro-Mediterranean initiative since its inception. At the launch of the partnership in Barcelona last November, foreign ministers of the 17 nations invoked the “pivotal role of the energy sector in the economic partnership”.

The fact that the region's energy reserves are the world's largest has not been overlooked by the partnership's political planners.