Russia says EU energy plan "discriminatory"

MOSCOW, Oct 24 (Reuters) Russia attacked as ''discriminatory'' European Union proposals to restrict its ability to buy up pipelines and power grids.

The plans could hurt competition and lead to a ''serious'' rise in gas prices, Sergei Yastrzhembsky, the Kremlin's top adviser on EU issues, said today.

The European Commission proposed last month stopping non-EU firms from buying energy transmission networks if their home countries did not have a prior agreement with Brussels, a move regarded as targeting Gazprom, Russia's state gas giant.

Yastrzhembsky told Reuters in an interview that the proposals ''could become the basis for a discriminatory approach to, say, Gazprom, which could restrict the principle of free competition''.

Russia, one of the EU's main energy suppliers, pumps oil and gas west through its pipeline systems across Belarus and Ukraine into central and western Europe.

President Vladimir Putin will discuss the proposals with EU Commission President Jose Manuel Barroso at a summit between the European Union and Russia in Portugal on Friday.

Yastrzhembsky said the EU draft rules, which would break up big European utilities controlling power supply, generation and transmission, could also force up prices for consumers.

''We think...carrying out the proposal on liquidating vertically-integrated energy companies...could lead to a serious increase in the price of gas,'' he told Reuters.

European diplomats say Russia does not allow foreign companies to buy its pipelines and electricity grids so there is no question of unfairness -- an argument dismissed by Yastrzhembsky.

If European countries did not want to depend on Russian energy, he said, ''we ask them to tell us starting from what year and in what volume of oil and gas these European partners are ready to turn down...so that we can be ready and redirect these resources, say to the Far East, to our other partners''.

''I am sure it will not be left without a buyer.'' RAPID DECISION Opposition to the EU draft proposals from large integrated EU energy firms such as E.on, Gaz de France and ENI, as well as the Union's own slow decision-making, meant a rapid decision on the issue was unlikely, he said.

Earlier, Yastrzhembsky said Russia and the European Union had agreed to set up an early warning system to flag up any disruptions to gas and oil supplies through Russian pipelines.

''We have been able to reach an agreement on the creation of a mechanism for early warning which is being created...to notify in good time about any problems arising with supply and demand,'' Yastrzhembsky told a news briefing.

Preparations for Friday's EU-Russia summit have been clouded by disagreements on energy, human rights and a Russian ban on Polish meat imports.

An opposition victory in last Sunday's Polish election has raised hopes that relations between Poland and Russia will improve. But Yastrzhembsky told Reuters that it was now too late for the meat issue to be resolved on Friday.

''There is no time...If the elections had happened a month earlier, of course there might have been a different situation.

Now there is just physically not time,'' Yastrzhembsky said in the interview.

The Kremlin had ''noted with satisfaction'' statements by Poland's likely next Prime Minister Donald Tusk about normalising relations with Russia, Yastrzhembsky said, adding: ''It remains to be seen to what extent they will be fleshed out in practice.'' REUTERS SG RK1709