Russian minister warns of EU energy reforms' impact on South Stream

May 25, 2011, 15:51 GMT

Brussels - A Russian official took a new dig at the European Union on Wednesday over recent reforms to its energy policies, arguing that they could discourage companies from investing in a major gas pipeline project that will benefit European countries.

'The creation of a new long-distance gas pipeline system is a massive project requiring very substantial amounts of capital,' Energy Minister Sergei Shmatko said following a meeting in Brussels about the South Stream pipeline.

'If companies aiming at realizing the project are deterred from initiating them or face restrictions over the returns they can expect on their investments, the result will be detrimental, above all to the interests of consumers,' he added.

South Stream is designed to supply Russian gas to Italy and Austria via the Black Sea - circumventing Ukraine, with which Moscow has had several rows over transport costs. Construction on the 3,600-kilometre pipeline is expected to get underway in 2013.

Shmatko's comments come three months after the row over the EU's so-called Third Energy Package broke out in public during a press conference by Russian Prime Minister Vladimir Putin and European Commission President Jose Manuel Barroso.

The major energy reforms, adopted in 2009 and currently being implemented by EU member states, are meant to boost competition and efficiency by, among other methods, forcing firms that sell energy to loosen their grip on pipelines and power grids.

Russia sees that as an attack on its major players, such as Gazprom - one of four companies involved in the South Stream project, along with Italy's Eni, France's EDF and Germany's BASF.

Gazprom chief executive Alexei Miller participated in Wednesday's South Stream-organized meeting in Brussels, which was billed as a presentation on the project and an opportunity for 'a more general overview of EU-Russia energy relations.'

It was also attended by EU Energy Commissioner Guenther Oettinger and a variety of other representatives from the bloc and South Stream partner companies.

'Speakers from both Europe and Russia stressed that the project will not only significantly enhance Europe's energy security, but will also have a positive impact on the continent's economy,' a statement issued after the meeting said.

Read more about EU Energy

Read more about Russia