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Russia to Keep Foreigners Away from Gas Pipes

Russia goes ahead with preparations for the G8 summit. Gazprom CEO Alexey Miller made a ringing statement at the World Gas Congress yesterday overturning European principles of energy market liberalization. Russian Finance Minister Alexey Kudrin told the press the same day that Russia believes that the Energy Charter should be reviewed. Meanwhile, a bill on gas exports that runs against regulations of the European transit protocol was submitted to the State Duma. The parliament may soon adopt it, according to unofficial sources. However President Vladimir Putin will be able to use it later as a negotiation tool in talks on energy cooperation at the July summit in St. Petersburg.

The draft bill On Gas Export, submitted by deputies Valery Yazev and Yury Lipatov to the State Duma on Monday, runs that "the organization or its subsidiary owning the united gas supply system has the exclusive right to carry out natural gas export." Should the bill be enacted, both current and prospective participants of the market will be barred from gas exports. Itera and Transneft have exported gas while TNK-BP, LUKOIL and a number of independent producers have declared intentions to do so. Exports from Central Asian countries may come under the law.

The draft limiting the gas business in Russia evidently runs counter to the EU Energy Charter and reacts to the European Union's demand to provide access to transit systems for all gas exporters. Valery Yazaev, co-writer of the bill and chair of the energy committee at the Duma, does not make a secret of the political grounds of the initiative. "I think that the bill can become one of the arguments of the Russian party at the G8 summit in St. Petersburg. We don't hide it that our position of that of 'hawks'." The deputy does not seem fazed that the bill is at variance with the Energy Charter. "We believe that the Energy Charter should not be ratified because this document is directly contrary to Russia's interests."

Valery Yazev is convinced that "the supply of gas and other strategically important natural resources must be regulated as strictly as arms supplies. Rosoboronexport has exemplified that this pattern is efficient."

Gazprom warmly welcomed the deputies' initiative. Alexander Medvedev, director general of Gazexport, told Kommersant yesterday: "Gazprom has always favored the principle of the united export channel. Surely we support the State Duma's draft because it outlines the current situation in the gas industry and rules of the game here."

The North European Gas Pipeline, Sakhalin 1 and Sakhalin 2 projects will not suffer in any way if the bill is adopted, Valery Yazev assured. "These projects are based on product-sharing agreements that have special reservations ensuring that the projects do not come under this law. Besides that, there is always a priority of Russian international agreements over internal laws," the deputy said.

The government has given no reply for the bill yet, but Mr. Yazev is sure that the answer will come "within a week." the Duma "will enact the bill at the spring session," he hopes.

Russian Finance Minister Alexey Kudrin told the foreign press yesterday that "Russia and other countries believe that the Energy Charter should be reviewed." However he underscored "poor description of the transit issue and investment regime", but not gas export liberalization, as the main fault. The charter does not appear to work at all, according to the minister, since a number of its articles are frozen or simply do not work. Alexey Kudrin said there are other reasons why the Energy Charter is unacceptable for Russia and "other countries" but did not elaborate saying that this is the prerogative of the meeting of G8 energy meetings.

The final word still depends on the Russian president. Informed sources of Kommersant believe that Vladimir Putin is very likely to veto the bill On Gas Export if Moscow manages to get some concessions from Europeans.

© Kommersant

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