Russia proves its worth at Rome energy talks

Russia’s Energy Minister is using an international gathering to again push the country’s reliability as an energy partner. 4000 delegates are in Rome for the World Energy Forum, including key EU regulators.

Viktor Khristenko says Russia’s energy relationship with Europe has changed from a passive supplier to an active partner over the past 15 years.

“Nobody can name a single contract in the energy sector that Russia as a partner has not fulfilled. Our contract obligations are secure to us,” Mr Khristenko said from Rome.

But the European Union may not be thrilled about the westward expansion of Russian energy companies. The EU Commission has suggested blocking foreign companies like Gazprom from controlling European energy networks.

Accompanying Khristenko at an exhibition on Russian energy, Sergey Bogdanchikov, the head of Russia’s largest oil company Rosneft, said such initiatives were groundless.

“Studying all the possible options is a right of both sellers and buyers. I am sure that in the end our relationship will be mutually beneficial. Exporting countries should have access to the retail network of their partners while importing countries should be able to extract energy supplies and help transport them to the final customers. The future is in this type of working model and both sides should try to make this happen as soon as possible,” insisted Sergey Bogdanchikov, CEO of Rosneft company.

Deputy chairman of Gazprom, Aleksandr Medvedev, confirmed that gas prices will increase as planned in 2008 – something all European partners expected.

“We are not increasing or decreasing the prices. In our contracts we have formulas – rather sophisticated ones – based on the components of these formulas, which include competitive fuels like fuel oil and gas oil. We are incorporating in our forecasts the future prices for these products. Then we can make our forecasts for natural gas prices. Yesterday I mentioned that the order of magnitude for the future prices could be close to $300, based on the available forecasts on the competitive fuels,” stated Mr Medvedev.

Yesterday TNK-BP complained about the high level of taxes that its company has to pay which affects the future development of the company.

“We can say that there is a real problem in operating in the Russian environment. Rising levels of taxation means that margins have been squeezed. This means that there is less and less free cash to invest in the future of the oil and gas industry,” complained Lord George Robertson, deputy board chairman of the TNK-BP joint venture.