Saturday

2nd Dec 2023

Russia-China deal overshadows talk of EU energy union

The EU's lack of a common energy policy costs the bloc €30 billion per year, Polish prime minister Donald Tusk told a conference of European energy experts on Wednesday (21 May).

But talks about the possibility of an EU energy union were immediately overshadowed by news that Russia and China have agreed a gas contract estimated to be worth over $400 billion (€300bn) over 30 years.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • Gazprom's $400 billion deal with China is the richest gas contract ever negotiated (Photo: kremlin.ru)

Signed off by Russian President Vladimir Putin at a summit in Shanghai, the 30-year contract with China's National Petroleum Corporation is comfortably the largest-ever negotiated by Russian state-owned energy giant Gazprom.

It is expected to deliver some 38 billion cubic metres of natural gas a year to China, starting in 2018.

The deal, which has been 10 years in the making, is also expected to help insulate Russia from the threat of EU sanctions as a result of the Ukraine crisis.

Speaking a few hours after the news came out at a conference on energy security in Brussels, Poland's Tusk told an audience dominated by representatives of government and industry that governments should agree to set up a common EU body to secure energy supplies.

"Every year we lose up to €30 billion just because we don't actually have an energy market in Europe yet ... and the very high prices of gas are affecting our competitiveness and employment rates."

"We need to think about an EU body that looks at buying gas," he said, mooting the possibility that this "could be done through an agency or a consortium … and would protect member states from a shortage of gas supplies".

The Polish Prime Minister has become the leading advocate for the EU to act as one to increase its clout in energy negotiations.

But he conceded that there would be scepticism in some capitals at the prospect of shifting decisions on energy supply from national to European level.

"I have met a number of EU leaders who have agreed in principle but when I explained that this would mean a common purchasing policy people were concerned that this would be impossible," admitted Tusk, although he added that "people said that the banking union was impossible".

Tusk also called for an end to secret energy contracts, describing them as "a barrier to an internal market".

"Do gas secrets deserve more protection than banking secrets?", he questioned, adding that the "EU should intercede on behalf of consumers and gas secrets affect consumers."

Securing Europe's energy supply and reducing the bloc's reliance on Russian gas, is a particular concern to central and eastern European countries, many of whom complain that they are overcharged by Gazprom.

But Tusk was clear that the crisis in the Ukraine was an opportunity to diversify supply and move away from a system of bilateral deals between individual governments and Russia.

Comparing Europe's energy concerns to the recent banking crisis in the eurozone, he noted that "times of crisis are the best time to draw hard and difficult conclusions".

"I hope that we don't have to spend hundreds of billions because we took too long to make these decisions," he said.

Gazprom is currently subject to a probe by the European Commission's competition department over its dealings with eight EU countries, and could face a multi-million euro fine for abusing its position as the dominant force in the gas market.

Under its contract with Gazprom, Germany currently pays an estimated 35 percent less for its gas than Latvia and Lithuania.

European Commission President Jose Manuel Barroso said that the EU executive had long been calling for a true European energy policy but that "minds in Council were not focussed".

The commission will publish a paper on energy security and supply in the coming weeks, before EU leaders gather in June for a summit meant to address the issue.

For his part, US Vice President Joe Biden on Wednesday suggested the development of a EU energy market could be the natural next step of European integration.

Time for EU energy union, says Polish PM

The European Union must create an energy union to secure its supply and reduce its dependence on Russian gas, Poland's Prime Minister Donald Tusk has said.

Ukraine: The other European election

Separatists killed 16 Ukrainian soldiers on Thursday, as Ukraine prepares to elect the man or woman who will try to end de facto Russian rule.

China ignores EU, offers to help Russia

China has joined India in helping the Russian economy, but closer to home Belarus and Kazakhstan are hedging their bets on future relations.

Feature

Uneasy calm in Kiev on eve of Sunday elections

The EU has urged Putin to let Ukraine choose a new leader, but its diplomats and people on the streets of Kiev are wary of his promise to "respect" what happens on Sunday.

Opinion

Dubai's COP28 — a view from the ground

Discussion of the biggest existential threat humanity has ever faced is barely mentioned on billboards or signage in Dubai — yet visitors are made aware quite quickly that t world rugby sevens tournament is imminent.

Opinion

'Pay or okay?' — Facebook & Instagram vs the EU

Since last week, Mark Zuckerberg's Meta corporation is forcing its European users to either accept their intrusive privacy practices — or pay €156 per year to access Facebook and Instagram without tracking advertising.

Latest News

  1. Israel's EU ambassador: 'No clean way to do this operation'
  2. Brussels denies having no 'concern' on Spain's amnesty law
  3. Dubai's COP28 — a view from the ground
  4. Germany moves to criminalise NGO search-and-rescue missions
  5. Israel recalls ambassador to Spain in new diplomatic spat
  6. Migrant return bill 'obstructed' as EU states mull new position
  7. Paris and Berlin key to including rape in gender-violence directive
  8. What are the big money debates at COP28 UN climate summit?

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Stakeholders' Highlights

  1. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  2. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Join EUobserver

Support quality EU news

Join us