- The Washington Times - Wednesday, October 25, 2006

Resistance to foreign investment in Russia’s giant oil and natural-gas industry threatens to stall expansion plans in Europe by the state-owned energy giant Gazprom.

The resistance, in turn, has exacerbated tensions between Europe and Russia over Moscow’s centralizing control of its energy sector and its bid to increase leverage in European natural-gas markets.

“We need to develop a mutual trust that requires transparency, the rule of law, reciprocity, non-discrimination, market opening and market access,” said Jose Manuel Barroso, president of the European Commission.

The European Union has been trying to get Russia to sign the Energy Charter Treaty for years, but during the EU summit in Finland on Friday, Russian President Vladimir Putin refused. He argued that Russia and the EU can agree on binding rules without a treaty.

Europeans had hoped to use the treaty to make it easier for their firms to invest in the Russian energy industry.

“We are not against the principles that are included in the charter, but we believe that certain provisions of the charter should be defined better,” Mr. Putin said.

European leaders remain disappointed over Moscow’s unwillingness to give European firms a fair chance to invest in its energy resources.

For example, Gazprom recently rejected a proposal by an international consortium to invest in the $20 billion Shtokman liquefied natural-gas development project, one of the world’s largest.

If Gazprom, the world’s largest gas company, pushes to increase its share in the EU’s energy assets, it could face anti-monopoly measures in Europe, the European Commission said on Oct. 12.

Following Russia’s Jan. 1 cutoff of natural gas to Ukraine, which threatened supplies to much of Western Europe, concerns over energy security have multiplied.

European consumers receive a quarter of their oil and gas supplies from Russia and that proportion is expected to rise sharply in the coming decades.

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