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Polish plan on EU Russian gas buying gaining support
May 26, 2014 / 12:50 PM / 3 years ago

Polish plan on EU Russian gas buying gaining support

* Eurosceptics likely to oppose central EU powers

* Analysts say idea could be taken up in part

* Uranium buying system offers a model

* Security of supply focus displaces climate debate

By Barbara Lewis

BRUSSELS, May 26 (Reuters) - Poland’s call for European Union nations to work together in price negotiations with Russian natural gas exporter Gazprom is gaining support spurred by the crisis in neighbouring Ukraine.

Following a tour of European capitals to drum up backing, Polish Prime Minister Donald Tusk was invited to Brussels last week to present his idea at a conference on energy security alongside top European Commission officials.

Tusk argued that just as it took the euro zone crisis to make a banking union happen, the Ukraine crisis should lead to an energy union.

“The only way to overcome crisis is by going for a European approach,” he said.

Poland has been one of the strongest advocates of a tough EU response to Moscow’s seizure of Ukraine’s Crimea region.

Germany and Italy, the biggest EU buyers of Russian gas in volume terms, back a more cautious approach on sanctions on Russia.

Yet there are signs of gathering support for Poland’s approach, with EU leaders expected to debate the idea at a dinner on Tuesday and at talks next month.

The idea will also feature in a report on energy security due from the European Commission on Wednesday.

A draft prepared for a June meeting of energy ministers seen by Reuters says there is a need to “examine the potential for measures to strengthen the bargaining power of the EU and its member states vis-à-vis external suppliers”.

The aim is to counter Gazprom’s practice of negotiating different deals with different nations.

Russia is the EU’s dominant external supplier of gas, providing around a quarter of demand, and is locked in a price dispute with Poland’s neighbour, Ukraine.

Some east European states, 100 percent reliant on Russian gas, also complain they have had to pay more than the EU average.

EU diplomats, speaking on condition of anonymity, said the Polish idea had support and even German Chancellor Angela Merkel had not totally ruled it out.

“We have not got a clear ‘no’ in Berlin,” one diplomat said. “Some of the issues have to be reflected on.”

Diplomats said a country’s negotiating hand would be strengthened if an official from the Commission were present at negotiations with Gazprom, although some member states have in the past resisted this, arguing it gave too much power to the Commission.

Eurosceptic Britain for one is likely to oppose any increase in centralised EU powers.

DOUBTS

“Quite a lot of member states share the objective, but seem to have doubts whether this is feasible in terms of trade and competition law,” another diplomat said.

The Commission’s official view is that forming a single energy market through better infrastructure to allow supplies to flow freely is the best way to harmonise pricing.

The Commission’s strategy on energy security, seen by Reuters, also says mechanisms to increase bargaining power would need to avoid any breaches of law on fair competition.

As an example of how such an approach might work, it cites joint purchasing of uranium through the Euratom Supply Agency. Euratom, the European Atomic Energy Community, aims to ensure all EU users of nuclear fuels get regular and equitable access to them.

Dieter Helm, a professor at Oxford University, said Poland’s central gas buyer idea was not necessarily incompatible with the laws of the EU single energy market, if the gas were auctioned.

Euroscepticism would limit how much support Poland could garner from fellow member states, Helm said, but its idea could be implemented in part and provide “a positive and lasting legacy from Russia’s annexation of Crimea”.

According to one diplomat, Europe’s increased focus on energy security might hamper efforts to agree new EU climate and energy policy.

Proposals include a goal to cut carbon emissions by 40 percent by 2030 versus 1990 levels, which Poland has been resisting as a major user of carbon-intensive coal.

A solution being considered involves “dropping the focus on climate policy and rather focusing on security of supply,” said the diplomat, who asked not to be identified. (Additional reporting by Nina Chestney in London; editing by Jason Neely)

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