THE INDEPENDENT ON SUNDAY: Russia 'vital to Europe's energy security': “It comes as Shell prepares to bid for a slice of a $30bn (£16bn) liquefied natural gas (LNG) project in the Barents Sea.”: Sunday 11 Sept 2005

By Tim Webb

Published: 11 September 2005

Europe will be dependent on Russia for reliable energy supplies for decades to come, Malcolm Wicks, the new energy minister, will say in a speech in Moscow this week.

Europe must develop stronger ties with Russia as a result, he will tell Moscow-based executives from Europe's largest energy companies, including BP, Shell, Norwegian firm Statoil and Russian gas giant Gazprom.

The UK became a net importer of gas this year for the first time in two decades as North Sea reserves dry up.

Britain, along with the rest of Europe, is becoming more dependent on gas imported from Russia, which already supplies 50 per cent of Europe demand.

Mr Wicks will say on Tuesday: "Reliable energy supplies for Europe for decades to come are dependent on strong, durable relations with Russia."

Hurricane Katrina has "highlighted how interdependent we all are" on energy supplies, he will add. The hurricane has knocked out most of the Gulf of Mexico's oil production and oil refiners in the area, sending the price of oil above $70 a barrel at one point.

Mr Wicks will also call for greater liberalisation of Europe's energy markets which "has some way to go". This has been highlighted in the UK when it emerged last week that E.ON was considering a bid for Scottish Power, even though the German firm's domestic market is protected from foreign predators.

It comes as Shell prepares to bid for a slice of a $30bn (£16bn) liquefied natural gas (LNG) project in the Barents Sea. Gazprom has invited bids to develop the 60 trillion cubic feet Shtokman gas field and will announce the winners of the first tranches of work at the end of the month. US firm ExxonMobil and Statoil are also thought to be bidding for the project which would more than double Russia's gas exports.

Jon Rigby from investment bank UBS said: "The Shtokman field is very large and requires a massive amount of investment. Gazprom also needs western technology to develop the field.

"The field is likely be parceled out to companies who can bring the most to the table," he said.  

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