EU says Russia using resources politically -report

By Staff
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MILAN, Feb 14 (Reuters) Russia is using its energy resources as a political tool but Europe can be confident that President Vladimir Putin will maintain exports to the continent, European Energy Commissioner Andris Piebalgs told a newspaper.

''Putin is certainly looking for strategic control of his resources and he's using them as a political lever,'' Piebalgs told Italy's La Repubblica in an interview published today.

But he added that Russia's domestic reforms meant internal prices should rise, cutting demand and leaving more natural gas resources available for export by pipeline monopoly Gazprom.

''Experience says Gazprom has always met its commitments. I would say that we can believe in Putin's good faith,'' said Piebalgs, who met the head of Italian energy firm Eni in Rome yesterday.

''I don't see a Europe left in the cold,'' Piebalgs added, pointing to its stockpiles, other suppliers and ''in emergency, we can always turn to coal.'' Russia has rattled European energy importers twice in just over a year by letting their supplies be interrupted as Moscow tried to force its former Soviet neighbours, through which pipelines pass, to pay market rates for gas and oil.

Russia blamed a gas flow disruption early last year on Ukraine and this year's 60-hour stoppage of the main oil pipeline to Europe on Belarus.

Putin said this month that Russia was always being accused of using its resources to achieve foreign policy aims, adding: ''That is not the case''.

Piebalgs said in the interview that the crises with Minsk and Kiev had caused a sense of insecurity over gas supplies from Russia, adding that in the one with Ukraine a year ago, ''the political nature of the decision to turn off the taps was more evident.'' DISTRIBUTION ASSETS Piebalgs said he favoured putting European energy distribution assets in public hands but added that the key thing was to ensure they were separated from production.

''Personally, I am in favour of the idea that ... ownership should be public. But there's nothing wrong with having the network in private hands. The important thing is that there should be a clear division between ownership of the lines and the supplies,'' Piebalgs said. The European Union's executive Commission has proposed breaking up the production and distribution assets of European utility companies, such as Eni, to answer customer complaints over the tight grip on the market by big integrated groups.

Some companies have argued this would amount to an expropriation of their assets.

EU energy ministers are expected to clash tomorrow over whether to break up giant utility groups as well as the Commission's proposed binding targets for use of renewable fuels, which are part of the bloc's fight against climate change.

REUTERS KD ND1612

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