UPDATE 1-EU agrees billions to make energy grid crisis-proof

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By Huw Jones and Pete Harrison

STRASBOURG, France May 6 (Reuters) - Europe's energy networks will receive a 4 billion euro ($5.3 billion) upgrade to make them more robust and flexible in future energy crises following a vote in the European Union assembly on Wednesday.

The project was launched after this winter's gas crisis left thousands of homes without heat, following a price row between Moscow and transit country Ukraine.

"This allows us to get moving immediately on projects that will provide a welcome boost to the European economy and make a real contribution to giving Europe more energy security in the future," said European Commission President Jose Manuel Barroso.

The plan to subsidise new power projects, gas pipelines and power cables aims to enable the 27 EU countries to help each other during energy crises and to generate employment for constructors and engineers in the face of recession.

The European Wind Energy Association welcomed 565 million euros earmarked for offshore windfarms, as well as grid upgrades that will help wind-generated electricity flow further through Europe.

The spending package and an extra 1 billion euros to build broadband internet connections will ensure Europe's recovery from recession will be a green and hi-tech recovery, Britain's Europe Minister Caroline Flint said.

But Friends of the Earth slammed the project for contributing 2.5 billion euros of subsidies to oil and gas companies, saying it would be better spent on insulating Europe's homes to cut energy use and on more green energy projects.

"In a time of economic downturn, it is ludicrous that one of the richest industrial sectors can receive public money to allow it to go on polluting," Friends of the Earth campaigner Darek Urbaniak said.

Energy security has crept steadily up the European agenda since Russia invaded neighbouring Georgia last August, and tensions show no signs of easing.

Russia has reacted angrily to NATO military exercises in Georgia this week, and on Wednesday said it would expel two NATO officials from Moscow in response to the Western alliance's recent expulsion of two Russian diplomats. (Reporting by Huw Jones, writing by Pete Harrison; editing by Sue Thomas)