Oil and Gas

UPDATE 2-No attempt to isolate Russia in pipeline plan -EU

* EU says open to talks on Russia energy plan

* Russian proposals don’t replace EU Energy Charter

* EU’s Ukraine pipeline aid aims to modernise system

* Russian role in Ukraine upgrade normal: Ukraine PM

(Adds comments by Ukrainian PM)

By Conor Sweeney

MOSCOW, April 30 (Reuters) - European Union Energy Commissioner Andris Piebalgs said on Thursday an EU-backed plan to overhaul Ukraine’s gas pipeline network was not an attempt to isolate Russia. “There was no attempt to isolate Russia,” Piebalgs told reporters after meeting Russian Energy Minister Sergei Shmatko. The intention was to modernise the Ukrainian gas pipeline system, he said.

Russia’s relations with neighbouring Ukraine over gas supplies have been fraught, with a New Year gas row cutting off supplies to Europe.

Russia expressed anger when Ukraine, which is responsible for the bulk of Russian gas transit to Europe, signed a deal last month with the European Union for the overhaul of its pipeline system without consulting Moscow. [ID:nLO943578]

Ukrainian Prime Minister Yulia Tymoshenko, fresh from talks in Moscow, said it was perfectly normal for Russia to take part in any scheme to upgrade her country’s gas transport network.

“At issue here is Russian participation in terms of supplying equipment, pipes, instruments -- everything needed to modernise and rebuild our network,” Tymoshenko told a news conference in Kiev.


She said the deal on modernisation clinched between Ukraine and the EU last month in Brussels and a Russian role in the plan “are perfectly compatible. They are not exclusive to each other in any way.”

Piebalgs, in Moscow to discuss energy security, also said a new energy pact proposed by Russia would not replace the European Energy Charter, but was a more ambitious overall plan.

The plans for a new energy pact were made by Russian President Dmitry Medvedev in Helsinki on April 20, where he said he wanted to ensure security of supply and replace the charter.

But Piebalgs said the Russian plan should be seen as an extension and not an alternative to the existing charter, which governs energy relations between 53 nations and bodies. Russia has not ratified the charter.

“This is a new proposal that is based on the experience of the energy charter Treaty, is more ambitious, but doesn’t replace the energy charter Treaty,” Piebalgs said.

The Energy Commissioner’s spokesman later said that the European Commission was open to further discussions with Russia on the latest proposals.

Russia’s senior energy official earlier said Moscow would supply enough gas to ensure transit to European consumers via Ukraine, but supply risks had not yet been eliminated. “From our point of view, risks remain,” Interfax news agency quoted Deputy Prime Minister Igor Sechin as saying during a meeting with Piebalgs.

“We have not yet reached guaranteed stability and we are prepared to clarify our position on this issue. When we say there’s a problem, we also propose a solution. We have even agreed to co-financing.”

The supply of “technical gas” to Ukraine -- the gas needed to ensure transit supplies are pumped through its pipeline system -- was a major sticking point in the stand-off that led Russia to sever supplies to Europe for two weeks in January. (Editing by James Jukwey)