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EU, Russia meet for top-level energy talks

  |   Feb. 22, 2011 at 3:53 PM
BRUSSELS, Feb. 22 (UPI) -- EU officials are meeting a Russian delegation led by Prime Minister Vladimir Putin this week for difficult talks about Russian-European energy relations.

The talks, scheduled for Thursday in Brussels, are aimed at tackling a number of issues, "from support to Russia's modernization process to trade and energy matters, from deeper technological cooperation to international affairs," the European Commission said in a statement.

Energy dominates both powers' minds.

Russia is the European Union's most important energy supplier, responsible for roughly 25 percent of the body's oil and natural gas consumption. To be fair, it's a mutual dependency: The EU accounts for 88 percent of Russia's total oil exports and 70 percent of its gas exports, the commission said.

Readily available liquefied natural gas and new shale gas finds in the United States and Europe, however, are threatening Russia's position as a dominant supplier. Moreover, Brussels and the individual EU member states have been eager to diversify their imports away from Russia following price rows with transit countries that temporarily halted supplies to Europe.

The third EU energy package, to come into effect next month, is aimed at strengthening the EU's diversification plans and liberalizing the market. It's also strongly opposed by Russia, which wants more security for its future supplies.

Gazprom Chief Executive Officer Alexei Miller said Monday that the EU and Russia were working on such long-term import guarantees.

"We are discussing issues covering the time the next decade, including a gas road map," Russian news agency RIA Novosti quoted Miller as saying. "We work on the basis of long-term contracts and we are to make forecasts with a high degree of probability to 2050."

European companies have long complained about the nature of the long-term gas contracts struck with Gazprom, the Russian energy giant.

The pricing for these contracts is linked to the crude oil price, which is currently much higher than the gas price on the different spot markets. The European industry wants to base contracts on spot prices, but Gazprom has refused.

Miller says the company's negotiation position has improved ever since North Africa and the Middle East have been plunged into insecurity by widespread unrest.

"As far as the Middle East and North Africa is concerned, we need to reconsider the question of reliability and stability of hydrocarbons," The Daily Telegraph quoted Miller as saying Monday. "I think the question of reliability and stability and safety of supplies from there should be analyzed and considered much more importantly than they were before these events."

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