SUMMARY: Gazprom eyes gas-powered generation in Europe, invites EU to dialog
PORTOROZ (SLOVENIA). May 31 (Interfax) - Investment in gas-powered generation in the context of the current economic and regulatory situation is not profitable, Gazprom chief Alexei Miller said at the annual European Business Council meeting.
A Gazprom representative has confirmed for Interfax that the company continues working through the possibility of projects involving gas-fueled generation in Europe.
Miller told reporters that his company is looking over the opportunity of working in the field of gas-powered generation in Slovenia, one of the most important South Stream pipeline transit countries.
"Along the route of natural gas to the consumer, most of all in Europe, there are barriers that it are more and more difficult to break through. Laws and regulations reflecting political and ideological conditions are far from economic rationality, distort inter-fuel competition on the market, and put natural gas in a disadvantageous condition," Miller said.
Contradictions
"Natural gas, certainly, is an abundant, environmentally friendly fuel that without interruption provides for consumers deliveries that compete among themselves, but this fuel needs to quickly be excluded from the European energy balance like any other hydrocarbon fuel," Miller said in comments on the European Union's position.
"As is clear from the EU roadmap, by 2050 these energy resources should be replaced by generously subsidized renewable sources. Time will tell how realistic the achievement of a goal like this is, but it already raises big doubts with us," he said.
"I don't want to criticize the document, and limit myself to noting that in it is stated the necessity of ensuring energy security at low, effective costs, but nothing is said about this can be achieved," Miller said.
"In general, the EU declares the important goal of reducing the release of greenhouse gases into the atmosphere. For this is proposed the vigorous increasing of generating electrical energy with the help of renewable sources with their massive subsidizing out of the pockets of taxpayers," he said, adding that specific subsidy figures are not being made public, "but analysis of indirect data show that in 2010 that figure reached fifty billion euros," Miller said.
Gas is better
"At that," Miller said, "the much more well-founded from an economic standpoint gas scenario of achieving one and the same goal is not being considered." "The emphasis ought to be put on gas generation in a sensible combination with renewable sources of energy. However, the reality is such that investment in gas generation in the current situation is not profitable," he said.
In Germany, for example, there is discussion of future power generation in light of plans to get away from nuclear power stations. "These same exotic ideas are being forwarded, including all new subsidies, auction systems for the creation of generating capacity that makes gas generation in Europe not attractive to investors. But again they propose subsidies, methods of non-market constraint that in the end impose a difficult time on the consumer and play havoc with the market," Miller said.
The Gazprom chief said he thinks that the most economical route to reducing emissions is "through natural gas in a sensible combination with other energy resources, including renewable ones." "It is enough to remove artificial barriers, and the market will put everything it its place," he said.
Russian gas - Windmill for EU?
"However," Miller said, "the task ahead seems different - de-carbonizing the economy, which has never crept into the statements of highly placed individuals." Then, he said, this is a purely political task, involving running against gas companies.
"But if that's so, then we must be honest to the end, and, for example, specify for our citizens the price of achieving such a goal and tell then how many hundreds of billions of euros will have to be paid from their wallets for such a reasonable battle with gas companies, with Gazprom most of all, like Don Quixote tilting at windmills," he said.
Miller called the EU to a non-contract, non-politicized approached based on mutual benefit and mutual interests.
He expressed perplexity about "appeals like the degree of dependence on Russian gas and Gazprom." "For a start, allow yourselves to doubt that deliveries of a quarter of the gas Europe consumes gives grounds for worrying about any dependence. More likely, it is we who depend on gas purchases by European countries that provide us with half our earnings," he said.
Gazprom will operate on the European market in compliance with the rules of the Third Energy Package, but will be dialoging with European authorities about how to bring them to life, Miller said. "It's good this document provides room for maneuver for various interpretations. The result of multi-party negotiations, we feel, should be a decision based on sound economic, not ideological, calculations," he said.