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RF energy sector to be seriously modernised in 5-10 years–Shmatko

October 24, 2011, 16:29 UTC+3

The Gazprom investment programme “will allow us to realise the Eastern Gas Programme, create a powerful gas transport system in the East and diversify our supplies”

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MOSCOW, October 24 (Itar-Tass) — The energy sector in Russia will be seriously modernised within the next 5-10 years, Russian Energy Minister Sergei Shmatko said.

Speaking at the International Energy Week on Monday, Shmatko said, “It is necessary to deal with total the reconstruction and modernisation of our power network. It will be provided 100-120 billion U.S. dollars within the nearest 10 years.”

In addition, the minister said within the nearest 5-10 years “we will hit the record in oil processing. Within the 5-10 years we will provide 20-25 billion U.S. dollars to oil processing. So, we will end discussions on fuel deficit in the oil producing country”.

The Gazprom investment programme “will allow us to realise the Eastern Gas Programme, create a powerful gas transport system in the East and diversify our supplies”, Shmatko said.

He noted that the Russian energy sector “is ready for foreign investments”. “We are ready and open for a dialogue,” he added.

Shmatko also said the Russian-European Commission talks on the third energy package of amendments on European energy legislation came to a deadlock.

Russia will fulfil all obligations under the long-term contracts and seek to actively develop the Eastern market, he stressed.

“We took a decision to look forward to diversifying our work. We intend shortly to formulate plans on the development of the Eastern vector of Russia’s energy policy,” the minister said, adding, “We are searching for new partners in the East to develop the transport infrastructure and implement new projects such as the construction of liquefied gas facilities.”

“Europe was always our priority market. Under present-day conditions we will be able to find attractive mutually advantageous decisions, including on the development of new secure transport routes. I can claim that we stand up to the ideologies,” Shmatko stressed.

“Our talks with the European Commission on the third energy package came to a deadlock. The European Commission refuted the Russian proposals, which had been put forth in the past two years,” he said.

At the same time, the minister noted that Russia “will fulfil all obligations and hold further talks to protect and defend its interests”. “The development of the modern transport network, the existing contracts and strict price setting are ‘sacred cow’ for us and it will be difficult to give them up,” Shmatko said. “Russia will rely on these issue during the talks with its partners,” he said.

For his part, Deputy Minister Anatoly Yanovsky pointed to the existing imbalance between investment assets of foreign companies in Russia and Russian companies abroad. “Foreign companies’ investments in Russia reach 25 billion U.S. dollars while Russian investments abroad amount to 6.5 billion U.S. dollars. Such asymmetric situation cannot be sustainable for long. Investments may be increased only on mutual beneficial conditions,” the Russian energy deputy minister stressed.

Commenting on the Russian-EC third energy package, Yanovsky said Some of the clauses of the “third energy package” run counter to the agreements concluded between Russia and the European Commission.

“We have been conducting an intensive dialogue on all these issues with our counterparts in the European Union, including those at the level of experts,” Yanovsky said. “This dialogue will go on.”

“We have been closely watching the current events in the EU member-countries,” he went on to say. “In particular, we keep an eye on progress in the ratification of the “third package” in those countries and the problems that emerge on the way.

“At this moment in time Gazprom no longer feels like a priority gas provider to Europe due to the position of the European partners,” Yanovsky said. “This forces it to seek new partners outside Europe and to supply them with liquefied gas.”

The “third package” the European commission proposed in 2007 stipulates that gas and electricity provider companies should not own transportation networks, because this leads to artificial price rises. Those requirements were initiated by minor trader companies, which claimed that large energy concerns hindered their access to distribution networks. The European anti-monopoly authorities then demanded that the German companies RWE and E.On should sell their sales and distribution networks. However, Paris and Berlin came out categorically against the forcible split of the largest regional energy companies, and the other EU member-countries agreed to a compromise – the networks and trader structures can remain to belong to one owner, but under the observance of an independent regulator.

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