Putin Discusses Energy Security With Neighbors

Russia takes on sensitive topics at Black Sea energy meeting

By Stephen Boykewich

The energy ministers of 11 countries met in Sochi on Wednesday to discuss sensitive topics including new pipelines and energy contracts, as President Vladimir Putin issued a warning against "unconscientious" investors."

The Black Sea region is an indispensable part of the global energy market... as a connecting link between Europe and Asia," Russian Energy Minister Viktor Khristenko said at the opening of the meeting of the Black Sea Economic Cooperation organization. Russia is chairing the BSEC this year in parallel with its chairmanship of the Group of Eight, for which it chose energy security as the main theme.

Ministers from the BSEC summit affirmed the importance of "energy security", which was a focus of this July's G8 summit in Saint Petersburg, but differences among the countries were evident. The conference came as Russia has alarmed foreign investors by threatening to withdraw permits for the 20-billion-dollar (15.8-billion-euro) Sakhalin-2 project in the Russian far east, citing environmental infractions by the companies involved in the project, including foreign firms.

Putin warned Wednesday that the government would take action against companies that were too slow in developing their projects. "I expect the (natural resources) ministry and the government as a whole to take such decisions, including as regards companies that work unconscientiously or do not fulfill license agreements," Putin said at a meeting with the minister for natural resources in the southern Russian city of Sochi. Russian officials also hammered foreign firms developing Sakhalin-2 at a separate energy industry conference in Sakhalin on Wednesday.

At the ministerial meeting in Sochi on Wednesday Khristenko told delegates that discussion would focus on plans to extend the Russian-Turkish Blue Stream gas pipeline, which he said had "proved its effectiveness both in financial terms and in terms of securing regional energy security." Russia and Turkey have clashed over Blue Stream since the pipeline came online in 2003, however, and delivery volumes have been growing at a slow pace amid price disputes and lower demand projections from Turkey.

Khristenko said Russia was considering expanding the pipeline to Israel and possibly to southern and central Europe, which analysts say would allow Russia to increase shipment volumes regardless of Turkish demand. The Russian minister also said "significant progress" had been made on the planned Burgas-Alexandropoulis oil pipeline, which Russia hopes will carry 30-35 million tonnes of oil per year to Europe.

Another potential point of conflict is an expected bilateral meeting between Khristenko and his Ukrainian counterpart Yury Boiko on a new gas supply contract. Energy relations between Russia and Ukraine have been tense since Russia cut natural gas supplies to its neighbor on January 1 during a price dispute, leading to supply shortfalls in Western Europe.

A Russian energy official earlier said that BSEC member state Greece was discussing a possible long-term natural gas supply contract with Russian state gas monopoly Gazprom from 2012 forward.

Numerous BSEC members are also at odds with Russia over the Energy Charter Treaty (ECT), which supports market liberalization in energy transit and investment. Representatives of Armenia and Moldova stressed that support for ECT principles was key to regional energy security, while Russia, which has signed but not ratified the ECT, has said it needs revision.

The BSEC was formed in 1992 to coordinate the economic interests of Black Sea-region states such as Russia, Turkey and Ukraine. The group is one of several regional organizations embracing countries bordering the sea, and holds numerous annual ministerial meetings to coordinate the group's economic policies. Russia directs 30 percent of its gas exports to BSEC members. The group's main members are Russia, Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Serbia, Montenegro, Turkey and Ukraine.

Stephen Boykewich is a journalist with Agence France Presse