EU should make joint gas deal with Russia: energy chief

3rd September 2010, Comments 0 comments

The European Union should negotiate a joint supply contract with gas giant Russia because some member states lack the clout to get a good deal on their own, the bloc's energy chief Guenther Oettinger said Friday.

"If we say we go together and make a contract for the European gas market, we would be in a better position for every member state, for every company and for every user and consumer in our union," Oettinger, who holds the energy portfolio in the 27-nation EU's executive commission, told reporters during a visit to Latvia.

Natural gas prices in Latvia are 30 percent higher than in Germany, Oettinger earlier told a meeting of centre-right European lawmakers in Riga, adding that bilateral deals are a reason for the discrepancy.

Latvia, a nation of 2.2 million people, relies entirely on Russia for its gas, a leftover from its decades as a Soviet republic. Riga won independence from Moscow when the communist bloc crumbled in 1991 and joined the EU in 2004.

Latvia has been negotiating prices for gas with Russian energy giant Gazprom and Latvijas Gaze, part-owned by Gazprom, signed a long-term gas distribution contract last February, running until 2030.

According to EU data, Latvians pay 24 percent more for their gas than their southern neighbours the Lithuanians, and 32 percent more than the Estonians to the north, even though the ex-Soviet Baltic trio are connected to the same grid.

"The European Union -- our member states -- have a good partnership with Russia but partnership means partnership and not dependency," Oettering said.

Gas has become a headline issue in Latvia as the centre-right coalition government of Prime Minister Valdis Dombrovskis braces for an October 2 general election.

In the pre-election fray, parliament recently voted to delay bringing in an excise tax on gas until the end of June 2011.

Latvia is currently mired in the deepest economic crisis in the EU and has been slashing public spending and hiking taxes as part of a rescue package led by Brussels and the International Monetary Fund.

© 2010 AFP

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