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Brussels, 3 October 2005

Joint EU Presidency and European Commission Press release on the EU - Russia Permanent Partnership Council on Energy, 3 October, London

The Permanent Partnership Council (PPC) on Energy held its first ever meeting in London on 3 October. Its key objective was to give additional political impetus to EU - Russia energy cooperation. The PPC described energy as a crucial part of the relationship between Russia and the EU, and discussed ways of deepening their engagement.

The PPC agreed that energy was rising up agendas around the world at the moment. Hurricanes Katrina and Rita showed the importance of secure and diverse energy supplies. The PPC also recognised the impact on energy security of an increasing demand for energy and the need to increase energy efficiency in order to tackle climate change. Reliable energy supply and demand was vital for the economic development of Russia and the EU and increased the chances of peace and prosperity in this century.

Russia has been a major supplier of energy to the European Union for many years and the EU continues to be a very important market for Russian energy exports. Thus, there is a natural and growing partnership between the EU and Russia and both have shared interests in ensuring a safe, reliable and sustainable energy.

The PPC welcomed Russia’s intention to make energy security a priority of its forthcoming G8 presidency. The PPC also discussed a range of international issues, including climate change and the Kyoto Protocol, the Energy Charter Treaty, and the International Atomic Energy Agency and stressed the value of international cooperation on these issues.

The PPC welcomes and reinforces politically the progress achieved until now through the EU-Russia Energy Dialogue and contributes to the implementation of the Road Map for the Common Economic Space between the EU and Russia, agreed in May. It draws upon the work of four thematic groups of experts from all interested parties - the EU and Russian authorities, and EU and Russian business. These four groups have been working for the last few months to come up with concrete steps to further promote in practical terms the energy relationship.

The PPC agreed that the deeper involvement of business and Member states had made a significant contribution to the dialogue. The PPC approved the preliminary results of their work, for example to look at the regulatory framework and incentives to improve energy efficiency; and find ways to enhance energy transport networks, as outlined in the attached document. They also called on the thematic groups to draft concrete proposals on areas of mutual cooperation.

The results of the PPC will be presented to the EU-Russia Summit on 4 October.

Notes for Editors

The Permanent Partnership Council (PPC) is a standard forum for discussing EU-Russia affairs. It consists of Ministers from Russia, the EU Presidency, the incoming EU Presidency and a European Commissioner. This format allows full discussion of issues on which the EU and Member States share competency. It is also a small forum, facilitating decision-making, and can be called by the EU , or Russia.

This is the first PPC on energy. Previous PPCs have focused on foreign affairs, and on justice and home affairs. The agenda includes discussion of security of energy supply, energy sector investments, infrastructure, trade, energy efficiency, climate change, Kyoto, the Energy Charter Treaty, and the International Atomic Energy Agency.

The PPC was chaired by Alan Johnson, UK Secretary of State for Trade and Industry. The European Commission was represented by Commissioner Andris Piebalgs. Energy Minister Viktor Krishtenko led the Russian delegation.

In the framework of the Energy Dialogue are four ‘Thematic Groups’, on Investment, Infrastructure, Trade, and Energy Efficiency. These are composed of experts from the European Commission and EU Member States, Russian government, and EU and Russian business. These groups have each met twice since June 2005, and have drafted papers for the PPC. One of the purposes of the PPC is to give political legitimacy to the work of the experts, and to define priorities for future work within the Thematic Groups.


Interim summary of proposed joint actions and further work in the Thematic Group of the EU-Russia Energy Dialogue

This document summarises the results of the four Thematic Groups, which have been working under the auspices of the EU-Russia Energy Dialogue. The results below are provisional, and in general accord with the initial measures and practical steps to attain the goals of the Energy Dialogue and Road Map of the EU-Russia Common Economic Space. Methods for fulfilling these goals will be drawn up during the next stage of the Thematic Groups’ work, and announced in a progress report for 2005.

1 Energy Efficiency Thematic Group

1.1 consider how to strengthen the capacity of the EU-Russia Energy Technology Centre to promote innovative and state-of-the-art technology for energy efficiency projects.

1.2 assess legislation and regulations in the field of energy efficiency, heat supply and renewable energies, including tariff regulations and market based incentives to improve incentives for greater energy efficiency.

1.3 analyse capacities of regional/local Energy Efficiency Centres; strengthen their role, with a view to developing concrete projects and partnership programs in the energy efficiency and energy saving sphere.

1.4 analyse institutional and legal frame work for contracting models and continue to investigate guarantees mechanisms for ensuring refinancing of investment – especially in the area of communal housing, construction, and district heating – where energy performance contracting can be an efficient instrument of financing energy efficiency investment.

1.5 take forward work on mechanisms to develop Kyoto Joint Implementation projects, through information and training, and conclusion of small-scale JI pilot projects to demonstrate opportunities for financing investment into energy efficiency and modernisation of the industrial and regional/local public sector.

1.6 exchange information and development of renewable energy pilot projects to disseminate respective knowledge.

1.7 provision of EU expertise for heat supply development schemes to harmonise standards and exchange information about respective energy agencies.

2 Trade Thematic Group

2.1 produce an inventory of, and prospects for, energy trade between the EU and Russian energy markets to evaluate obstacles and make recommendations to expand trade and reduce obstacles, especially in the light of Russia’s accession to the WTO.

2.2 consideration of security of supply and demand and predictability and transparency of energy trade, including long-term contracts and market instruments, wholesale trade hubs (energy exchanges), trading system for Russian oil in foreign stock exchanges and equal and non-discriminatory access to pipeline transportation networks in Russia and the EU.

2.3 work through sub-groups on oil, gas, electricity, nuclear and energy related equipment.

3 Investment Thematic Group

3.1 work on regulatory and legal framework issues, including access to primary energy resources, restrictions on foreign investment, and continuing reform in the energy sector, need for clarity and predictability and carbon trading procedures

3.2 work on mechanisms for financing joint projects, including security instruments, availability of long-term contracts, private public interaction, cross-subsidisation and non-economic tariffs, allocation of energy efficiency benefits and need for confidence building.

3.3 work on tax optimisation including the fiscal frameworks for exploration and production activities, eligibility rules for Production Sharing Agreements and achieving investors’ confidence in the tax system.

4 Infrastructure Thematic Group

4.1 analyse the existing energy transport networks between the Russian Federation and the European Union, and identify possible enhancements.

4.2 evaluate the existing hydrocarbon transport infrastructure and possibilities for the development of new strategic transportation routes between the Russia and the European Union.

4.3 elaborate key principles on associating private investment with public ownership in the development of infrastructure facilities.

4.4 consider the regulatory framework in the EU and Russia and how it should facilitate infrastructure development - with particular reference to

  • non-discriminatory access to energy transportation networks
  • greater transparency of tariff structures, policies and regulations in EU and Russia

4.5 monitor on-going feasibility study on the synchronous interconnection between the UPS/IPS and UTCE grids with a view to completion as soon as possible.

4.6 continue to work through sub-groups on gas, oil (including oil product) and electricity connections.

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