Early Warning

Russian Energy Minister Viktor Khristenko, who was meeting with EU Energy Commissioner Andris Piebalgs in Brussels on Tuesday, Oct. 16, reiterated concerns over a European Union energy market reform plan that Moscow fears will hamper efforts by its gas monopolist, Gazprom, to expand into Europe.

Last month, the European Commission, the EU's executive arm, proposed to disband major utility companies that control power supply, generation and transmission in a bid to boost competition and lower prices in the 27-member bloc.

The commission, however, inserted a clause in the proposed legislation to bar foreign companies from controlling European pipelines and power grids unless they adhere to the same rules as EU firms and their home country has reached an agreement with officials in Brussels.

Loophole could aim at Gazprom

The loophole was immediately dubbed the "Gazprom clause" by commentators who argued that it was specifically aimed at the Russian monopolist company. Russian energy officials have criticized the EU's proposal as protectionism.

At a press conference after talks on Tuesday, however, Piebalgs said a group of Russian and EU analysts would review the "Gazprom clause" and that Khristenko had agreed to await the review before making a final political decision.

"I appreciate this very pragmatic approach," Piebalgs said at the news conference.

"We are interested in active consultation with our European colleagues on new energy initiatives," Khristenko said, according to Reuters.

Early warning system on energy

Despite the on-going dispute, Khristenko and Piebalgs agreed on setting up an "energy early warning system" to help avoid problems in the supply of or demand for Russian energy deliveries.

Russia is the EU's biggest supplier of gas, most of which reaches the bloc through the Ukraine. The EU wants to avoid a repeat of the events of late 2005, when Gazprom cut its gas supplies to Ukraine in a pricing battle that led to shortages in some EU countries.

A dispute between Russia and Belarus in December and January also affected oil supplies to some European countries.

The early warning system would include a hotline for emergency situations and obliges Brussels and Moscow to inform each other of potential problems through designated contacts.

"The EU has sufficient reserves"

But Piebalgs said the warning system was not a signal of looming problems.

"I have no doubts about security of supply for this winter," he told reporters, adding that the EU had sufficient energy reserves to cover needs in the coming months.

According to Reuters, he also downplayed the effect of record high oil prices on gas prices.

"There is a formula related to oil prices, but it doesn't mean necessarily that this follows oil price fluctuations," he said, adding that he expected Tuesday's price spike to fall within a week.

Khristenko said high oil prices would not largely affect gas prices.

"I don't expect major price changes compared to the current situation," he said.

Energy is expected to be a top item on the agenda at an EU-Russia summit in Portugal on Oct. 26.