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Earnings

Russia seeks to keep Europe off its energy turf

MOSCOW (Reuters) - Russian President Dmitry Medvedev will try to persuade gas producer Uzbekistan that it should ignore the overtures of European suitors hunting for alternatives to Russian energy supplies.

Russia's President Dmitry Medvedev speaks during a news conference after the Kremlin meeting of nations involved in the gas dispute in Moscow, January 17, 2009. REUTERS/Sergei Karpukhin

Two weeks of fuel shortages caused by a row between Russia and Ukraine have galvanized European efforts to tap into non-Russian energy and Central Asian states are being courted.

Both Uzbekistan and its gas producing neighbor Turkmenistan pump all their exported gas via Russia, but are showing signs that they are open to new alliances -- a change that could threaten Russia’s control over the region’s energy.

“Uzbekistan, like its neighbors, is trying to diversify its relations,” said Azhdar Kurtov of Russia’s Strategic Research Institute. “That is noticeable ... in the gas sector.”

Medvedev will meet Uzbek President Islam Karimov on Thursday at the start of a two-day visit, his first to the former Soviet republic since he was elected president last year.

Europe depends on Russia for a quarter of its gas and anxiety over the reliability of those supplies was increased by the Russia-Ukraine dispute, which disrupted flows to about 20 states in the European Union.

“It is unwise for one member state to rely on one country for its energy supplies. This was not secure,” European Commission President Jose Manuel Barroso said this week.

“We have to stop simply talking about energy security in Europe, and start doing something about it,” he said.

NOT ENOUGH GAS

Europe’s hopes for diversifying its energy supplies rest in large part on the Nabucco project, a plan to pump up to 31 billion cubic meters (bcm) a year of gas from the Caspian Sea region to Europe, bypassing Russia.

The problem is that for now, there is not enough gas to put into the planned pipeline. Iran is a possible source, but the standoff over Tehran’s nuclear program makes that awkward for the Nabucco project’s European backers.

The other potential source is Central Asia, which exports about 70 bcm a year -- about the same as Italy’s annual consumption.

Turkmenistan is the region’s biggest exporter. Uzbekistan though plays a crucial role in Central Asia’s energy system because Turkmen gas is pumped across its territory. It also has promising but untapped gas reserves.

Just as with Iran, building closer energy ties with Central Asia has been politically sensitive for Europe.

Western states say Turkmenistan is undemocratic, though there have been modest reforms since autocratic leader Saparmurat Niyazov died in 2006.

Uzbekistan was the subject of EU sanctions after violence in the town of Andizhan in 2005. Uzbek officials said 187 people were killed in a police action against armed Islamist militants. Witnesses said hundreds of unarmed civilians were killed.

FORGIVEN

Brussels last year dropped most of its sanctions. Soon after, Uzbekistan pulled out of the EurAsEc customs union, a Moscow-led body used by the Kremlin to underline it clout in its former Soviet satellites.

“The thing is that they (Uzbekistan) have sensed that they are forgiven for Andizhan, that no one is pressing them any more over human rights,” said Alexei Malashenko of the Carnegie Moscow Center, a thinktank.

“And so naturally they believe that now is the time to improve those relations (with the West) ... That is why Karimov is underlining at every opportunity that he depends on no one and has the right to choose whatever partners he wants.”

Moscow has another reason to want to keep Uzbekistan in its orbit: the interest being shown by the United States in military bases and supply routes in Central Asia.

The U.S. military’s regional chief, General David Petraeus, visited Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan recently to explore new transport routes to supply U.S. operations in Afghanistan.

A Kyrgyz government source told Reuters this month it planned to close down a U.S. military air base there.

That has fueled speculation that Washington, which closed a base in Uzbekistan after the Andizhan clashes, could re-establish a military presence there instead.

Writing by Christian Lowe; Editing by Elizabeth Piper

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