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Brussels Mounts Power Grab Over State Energy Deals

The European Union executive on Wednesday demanded total control over oil and gas deals individual member states strike with the likes of Russia or Libya.

Guenther Oettinger, the EU Energy Commissioner, wants the power to vet contract negotiations from day one for all future energy agreements.

An energy exporters’ dream, the bloc is home to half a billion consumers and about 20 million companies, but has in recent years been left badly exposed in winter as Russian gas giant Gazprom turned off distribution taps amid disputes with transit state Ukraine.

The EU has long toiled to find a common energy policy, either towards external providers or when dealing with internal energy giants — as seen in billion-euro anti-trust fines over recent years for major German and French producers.

Taken together, the 27 member states import 60 per cent of the bloc’s crucial electricity-generating gas requirements, and 80 per cent of its oil needs.

Oettinger said he aimed to end “divine rule” by the likes of Gazprom, saying centralised negotiations of hugely lucrative and politically sensitive contracts with potential rivals such as Azerbaijan would better protect all member state and end-users’ interests.

“If we speak with one voice, I think we have got a completely different weight” in negotiations, he added.

His plan foresees the commission acquiring “the right to monitor negotiations and scrutinise draft agreements,” but diplomats have grave doubts.

It “risks posing problems for many member states,” warned one. “We don’t expect it to be adopted,” said another.

Oettinger maintained he was “optimistic” of winning backing by EU energy ministers later in the year, but he struggled when piloting moves over the past year to impose a drilling moratorium on offshore oil, and full-spectrum safety testing on nuclear power reactors.

He needs support from the 27 states as well as the European Parliament, whose head Jerzy Buzek, a former Polish prime minister, insisted that “common strategic reserves must be available, and managed throughout the continent in a spirit of solidarity.”

Oettinger cited the experience of the Yamal-Europe gas pipeline, a deal initially done by then-president Vladimir Putin and the previous German chancellor Gerhard Schroeder.

It runs from northwest Siberia to Germany, via Belarus and Poland, and Oettinger said the countries and partners involved initially wanted “to sit on the thing for themselves” but were then forced to open access under EU prodding.

Oettinger said he was relaxed about winter supplies this year despite a new Russia-Ukraine pricing row, after a “dummy run” on Tuesday with the first gas pumped into the 1,220-kilometre Nord Stream pipeline bypassing Ukraine.

It is to come on stream on November 8, and should guarantee “five per cent of annual European consumption”.

Gazprom is also involved in further plans for a future Black Sea pipeline called South Stream, alongside Italy’s ENI, Germany’s Wintershall and France’s EDF.

More generally, when asked whether the commission would demand democratic standards are met before contracts could be agreed, Oettinger said there would be “no way round that” for the likes of the emerging authorities in the post-Moamer Kadhafi Libya.

But he also conceded that “most of the countries we get these products from don’t really have the same freedoms … the same respect for the rule of law”.

To which he added voluntarily: “Take China — the majority of our rare earths come from there, need I say more?”

Ultimately, he concluded, “if we say we can only deal with people with full democracies and market economies, we might as well go and park our cars in the garage!”

Australian Associated Press, 9 September 2011