EU Studying Efficiency of Trans-Caspian Gas Pipeline Interview with EU Commissar Energy Issues

Politics Materials 1 December 2006 13:44 (UTC +04:00)
EU Studying Efficiency of Trans-Caspian Gas Pipeline  Interview with EU Commissar Energy Issues

Trend Special Correspondent in Kazakhstan interviewed the European Union (EU) Commissar on Energy Issues, Andris Piebalgs

Question: The European Union is at present actively lobbying the construction of the Trans-Caspian gas pipeline. How realistic is the implementation of the project?

Answer: It is a serious project that we proposed for Kazakhstan. Now we have passed to a new state and it is necessary to resolve the economic expediency of the project and then the countries will themselves decide whether or not to participate in it. We must carry out research into the economic expediency of the construction of Trans-Caspian gas pipeline and all issues linked with ecology.

Q: Is the EU ready to Offer Equal Facilities to future gas suppliers, i.e. Kazakhstan, Azerbaijan, Iran and Algeria?

A: With respect to conditions specified for different suppliers I should note that they are identical for all in the EU, because the rules of the internal and external market of the EU in respect to all supplied are identical and there are no privileges or discriminations.

Q: Russian gas giant Gasprom reports an increase of gas prices for Europe by 14%. Are you looking for alternatives to reduce dependency on Russia?

A: At present a policy on the gas price is formed on the basis of a formula related to world market oil prices. Our contracts were signed at a time when prices were defined through oil prices. A major part of contracts existing in the EU is not defined through political talks. I do not participate in the long-term or short-term contracts between Italy's ENI and Gasprom, or between big European gas purchasers and Gasprom. It is the price on their contract and this is what I actually receive the internal European market.

A rise in gas prices by 14% occurs where the old mechanism on price formation exists and where it is really lower than major mass in EU countries. For instance, in my country [Latvia] the prices were lower than other EU countries and Gasprom is gradually increasing it to the same level which exists in other EU countries.

But I do not see any problem with Gasprom regarding prices. The company covers 25% of EU's demand, which is big enough. However, we have other major suppliers, Norway and Algeria, and previously we have been covering 10% of our demand at the expense of liquefied gas.

Q: The Kazakhstan Ministry of Finance announced the commencement of inspection of contracts with oil companies to detect the observation of tax legislation. How could you comment on strengthening the tax burden in Kazakhstan?

A: On the one hand the rules of investing should be exact. If the contract is concluded, it will be implemented on those very same terms that it was agreed upon. On the other hand at present oil prices have increased considerably and there are interests of the country, the wealth of which is assimilated. Kazakhstan should make a wise decision to enable companies to make more profit, as the prices are high, and also observe its own interests.

It is necessary to find a balance in satisfying both sides. Though oil companies are unwilling to lose any income, Kazakhstan is the country where investments in the oil and gas sector are the most open. Kazakhstan has always observed the rules of the game and I hope it will continue.