* Russia's Putin warns EU policy could drive up prices
* Says EU energy package tantamount to property theft
* EU describes energy talks as "frank"
(Releads, adds quotes, details)
By Darya Korsunskaya and Pete Harrison
BRUSSELS, Feb 24 Russian Prime Minister Vladimir
Putin warned the European Union on Thursday its rules on energy
infrastructure could drive gas prices higher, making clear the
extent of disagreement with the EU on energy policy.
Speaking to reporters after talks with European Commission
President Jose Manuel Barroso, Putin said the EU's rules on the
ownership of pipeline infrastructure, known as the third energy
package, would ultimately harm European consumers.
The rules impose limits on the ownership of EU pipeline
infrastructure by gas suppliers and call for the "unbundling" of
over-concentrated ownership. Under the rules, Russia could be
forced to sell off some of its pipeline network.
"We consider that the full and the mechanical implementation
of this package could lead to a rise in energy prices on the
European energy market," Putin said, adding:
"The third energy package, it is quite clear, will harm the
activities of our energy companies. We are talking in practice
about the confiscation of property."
Barroso tried to paper over the differences, saying the EU
and Russia had made solid progress during several hours of talks
between members of the Russian cabinet and the EU executive, and
said the rules were the same for all countries.
"We believe our third internal market energy package is
non-discriminatory," he said, pointing out that Norway, for
example, had to follow the same set of directives, which he said
were compatible with World Trade Organisation rules.
"What we are asking of foreign companies is to accept the
same rules that we are implementing for our own companies.
"There are differences in the way we look at this third
energy package but there was a very frank and open discussion on
this matter ... We want Russia to remain our most important
partner in gas," he said.
The EU imports around 40 billion euros ($55 billion) of gas
each year, with 40 percent of imports coming from Russia.
Maintaining the consistency of those supplies is central to the
EU economy and the bloc's long-term energy security goals.
In 2009, Russia cut off energy supplies to Ukraine, a
transit point to Europe, because of a dispute over payments,
leading to gas shortages in many EU member states.
EU-Russia differences over the energy rules have complicated
relations when Russia is looking to secure EU backing for its
entry to the WTO. Russia is the largest economy outside the
global trading bloc.
NORTH AFRICA UNREST
Speaking ahead of Thursday's meeting, Putin described the
energy rules as "robbery", saying they threatened billions of
dollars' worth of new pipelines that will carry Russian gas to
Western European customers from Siberia and the Arctic.
Officials said on Thursday that Russia's main objection to
the EU laws was that they might force Gazprom (GAZP.MM),
Russia's largest company and the world's largest extractor of
gas, to divest from stakes in a Lithuanian gas network.
The EU, Russia's biggest trading partner, wants Putin to
remove a host of import duties on goods such as farm equipment,
cars and timber, implementing pledges Russia has made during its
18-year bid to join the WTO.
The European Union's $16 trillion economy dwarfs Russia's
$1.5 trillion gdp but Russia supplies 23 percent of the European
Union's total gas needs and the EU's dependence on imports is
likely to rise in the coming decades.
Putin highlighted that dependence on Thursday, saying unrest
in Libya made Russia's pipelines more important than ever.
Instability in North Africa and the Middle East may force
Europe to reconsider the risks of diversifying gas imports away
from Russia, whose South Stream export pipeline plan rivals the
EU's Nabucco link to tap supplies from the Caspian basin.
Russia says the EU's push to improve competition in its
energy market threatens pipelines that have been started,
including an onshore extension to the Nord Stream pipeline, and
will endanger the security of future supplies.
The plan included a so-called "Gazprom Clause" designed to
prevent companies from outside the bloc from buying up strategic
distribution networks without approval by governments.
Russia is the EU's single largest gas supplier, followed by
Norway, Algeria, Nigeria, Libya, Qatar and Egypt.
(Additional reporting by Douglas Busvine and Thomas Grove in
Moscow and David Brunnstrom in Brussels; editing by Andrew