PRESS BRIEFING

EU Energy Commissioner Andris Piebalgs

March 26, 2007

Transcript by:

Federal News Service

Washington, DC

MATTIAS SUNDHOLM: So welcome, everybody. Thank you for coming today. I'm very happy to introduce to you the European Commissioner for Energy Andris Piebalgs. It's the Commissioner's first visit to Washington. And today, the Commissioner has been meeting with Acting Secretary of State John Negroponte, Secretary of Energy Samuel Bodman and Alan Hubbard at the White House, Assistant to President for Economic Policy and Director of the National Economic Council.

The Commissioner will make some short introductory remarks, after which you are free to ask your questions. And please, just state your name and affiliation when you ask your question.

ANDRIS PIEBALGS: Okay, the purpose of my visit is definitely follow-up of strategic energy cooperation agreed between European Union and the United States in the last summit in June last year. We have agreed a couple of cooperation, a couple of - (unintelligible) - and definitely I needed to bring some follow-up. At the same time, we also are preparing for next European Union-United States summit at the end of April. And we should find how strategic energy cooperation should be brought forward. And thirdly, European Union has recently adopted energy policy for Europe. And I was more than glad to explain the basic elements, basic approaches and viability, which is very robust and a very comprehensive approach that we are facing.

On the cooperation areas that I would single out that we have moved forward since last meeting in the summit in June, first of all, in external relations I think we have had very good cooperation, encouraging diversification of energy supply routes, in particular for Caspian Sea area, and also strengthening the International Energy Agency work. Secondly, it is work we embarked on, biofuels - for standards, for research in second generation biofuels. Thirdly, the work that we are in progress on energy efficiency issues. Energy efficiency will be used regulatory measures since the cooperation could be strengthened, I think, between the EU and the United States. And the area that we have always cooperated well, it is research area. But particularly I think that we should strengthen emphasis on the carbon sequestration technology because of security of supply and also fight against climate change cause will stay important, and we need to develop technology as soon as possible.

I also explained the basic approaches in energy policy for Europe, where we merged security of supply issues with fight against climate issues. That means that we try to avoid the contradiction between energy policy and environment policy. And as a result of the merger, we have established in the European Union long-term, clear investment convictions for investors in energy sector. We made strong focus with renewable energies, achieving 20 percent of share of renewable energy by 2020. We also strongly worked with energy efficiency, achieving 20 percent savings compared with scenarios usually by 2020. And I think more importantly, from all these areas, I would also emphasize the creating of a European-wide market where the European Commission will propose new developments of strengthening the internal energy market with more interconnections; these European regulators for cross-border energy trade issues that will facilitate investment, and they will definitely bring down prices for energy consumers.

I will stop here because I believe you have a lot of questions, so I will be more than happy to answer.

MR. SUNDHOLM: Okay. Well, let's start at the end. Please just state your name and affiliation.

Q: Sure, Ian Talley, Dow Jones newswires. I'm wondering, do you - I've got a list here; I'm just trying to determine which one. There are a bunch of us. In terms of EU-Russian relations, firstly, will the EU become Russia's lapdog because of its dependency on gas?  And secondly, in terms of that - and I use that provocative word for a reason - what is better, long-term gas contracts for security of supply or a liberalized market in terms of you, as a EU commissioner. And no offense at all meant.

MR. PIEBALGS: No, no, I understand. First, about being lapdog of Russia, I think it is an overstatement. At least today, we've got 25 percent of our consumption of gas from Russia, that's true; that is a considerable amount. But if I see development in the years to come, Russian share will not increase in our consumption because other producers also increase their production volumes, and particularly their sales to the European Union. Norway will increase their sales to 130 billion cubic meters per year until 2010 from 75 now. Algeria is also planning increase, around about 20 percent of sales of gas to the European Union. We are now embarking on a way of contracting quite a lot of regasification terminals, not only in U.K., not only in Spain. Spain has five. Two will come now in Italy, one in Germany. So we are trying to diversify all the supply for our market, so there is no danger of the EU being lapdog-dependent on one supplier, whoever it is, Russia or any other. So we are trying to diversify our supply.

What is better, long-term gas contracts or liquid market?  I would say both are important. And I believe that with new proposals of separation of networks from, say, competitive activities, we can achieve both, because it's quite clear for investments in upstream, you need certainties that you will have chance to sell in the market. But it should not be in detriment for liquidity in the market. That means that we should not allow monopoly development in the EU internal gas market. Internal gas market should work on the assumption that there is competition. And if it is not, then obligatory gas levies (?) should be imposed on big companies that come with the huge gas portfolios in the market. That means that both are needed. One is for the relations of main suppliers. But inside the internal EU market, it's definitely market liquidity, spot markets that should prevail.

Q: And in terms of the Algerian deal, do you have any more information on the Algerian-Russian collaboration on gas?  It's something you had mentioned several months ago when you said you didn't have the clear contract and you were going to contact the Russians and Algerians. Can you provide us any more information?

MR. PIEBALGS: Yeah, I contacted both sides. The information is that they are cooperating on research or cooperation on technology, but their cooperation is definitely not the ones that are looking that could bring some type of cartel arrangement. But still - (cross talk). They will not work as a cartel, so that they will try to cooperate on the issues that have nothing to do with the customers.

So it is the issues of technological challenges, of research activities, perhaps some slots (?). But at the same time, I can't exclude at this stage that there will be gas cartels established. And that's why I call always that is the wrong move; it jeopardizes the development in gas market, and definitely, consumers lose confidence in the gas supply. And to be fair, gas could be replaced. It's not a good choice for the European Union because gas is very clean as a fossil fuel, but it could be replaced by other means - fossil fuels like coal or lignite or by nuclear. So you can find a way how to deal with less gas internal in the energy mix. But it's not our wish. Our wish is to have liquid gas market as we are having liquid electricity market.

Q: Yes, my name is Andrei Sitov. Sorry, I am writing and talking at the same time. My name is Andrei Sitov. I am with TASS, the Russian news agency. Obviously, my question is probably somewhat of a follow-up to this but with a slightly different angle. We are here in Washington. You are talking about cooperation with the Americans. So my question to you is, do you see a common approach to energy policy, especially as regards Russia, on the part of the EU and the United States?  If not, what is the difference?

MR. PIEBALGS: I would say what we are definitely sharing with the United States on, it is approach to the market, because both European Union and United States strongly believe in liquid and transparent markets. This is where we share and we are both working for this. We are working together - International Energy Agency - and the same approach to the gas.

With concern to relations to Russia, definitely we have a much more detailed relationship with Russia, because Russia is the biggest supplier of it. So we are trying to establish more deeper energy relations, and we will continue to do so. I very much expect the post-PCA treaty can bring also some articles in our energy relations, Russia being the closest. Historically, we have always bought gas and oil from Russia, and we are not afraid to buy it in the future. But at the same time, we will definitely try also to diversify supply. There is nothing worse than you just have one monopoly supplier.

On the United States, United States is investing in Russia. United States is also, I think, buying a bit of oil. I don't know how much; not too much. And so far, Russia hasn't been very active in LNG. There have been small deals, so it is a bit different activities. I would say we are much more interested in energy relations with Russia, if I would say, United States being less exposed to energy relations with Russia.

Q: I was asking more in the sense of this approach that you have as regards to Europe. Does this meet with the approval, support, rejection, whatever - what is the reaction from Washington to this approach that you have?

MR. PIEBALGS: I think we don't discuss in this room, because it's difficult - (unintelligible) - we should discuss this issue. I think it is; they are buying gas and oil; we will continue to buy it. The United States is doing it. We are going from the market approach. But we are calling for transparency in the market. The G8 summit conclusions should be fulfilled. That is the way we approach it.

So we are not coming from like a - we are not forming a cartel of gas consumers or oil consumers. We are not going for this. That's why I think I can't answer exactly your question. In today's debate, we did not discuss Russia. We discussed energy efficiency. We discussed how to move these renewables; how to cooperate in the International Energy Agency. But we did not discuss Russia because Russia is big producer, but one of the producers of hydrocarbons in the market.

Q: One last thing - the Americans have started talking about maybe finding a role for NATO in securing energy supplies. From the point of view of the Europeans, is that a good idea?

Q: To specify that a little bit more, you also said that -

MR. SUNDHOLM: I'm sorry; where are you from?

Q: Oh, sorry, excuse me. Desmond Butler from the Associated Press. You said that you discussed trans-Caspian issue. Do you have the sense that there is broad agreement with the U.S. on what needs to be done with the trans-Caspian pipeline or are there disagreements?  And what does the EU see needs to be done in order to open up that route?

MR. PIEBALGS: Yes, I will start first of all saying recognition to the United States because the United States been active in the region, Caspian Sea region, for diversification of oil. Baku-Tbilisi-Ceyhan pipeline definitely was being built with clear support of the United States. And we very much appreciate United States diplomatic activities throughout the world; and United States support diversification of gas supplies to the EU and provides us also support in all ways to diversify supply. But we have achieved at this stage for gas - that's the first gas supply from Azerbaijan will achieve European Union orders year. And Shah Deniz field will be giving - Shah Deniz field will give energy to the European consumers.

But we are looking definitely much more. Kazakhstan, with which we establish an energy partnership and we have memo of understanding, is definitely one of the countries we are looking very much in forward to getting gas from. The gas production in Kazakhstan will increase. We are also exploring possibilities for buying gas from Turkmenistan. So it's good - so it could be good source also in the future.

Q: Directly, yeah.

MR. PIEBALGS: What the issue is now is we are making feasibility studies for trans-Caspian pipeline - gas pipeline, because to get gas to the European Union from Turkmenistan and Kazakhstan, we face some issues: where it should pass through the pipeline via Caspian Sea or via land route, but both land routes are not very popular with some countries. The territory should be - (unintelligible). So we are working from assumption that we will build trans-Caspian gas pipeline. And I don't see the actual reasons why this investment should not be made. Gas prices are very good. I believe that diversification of consumers will be very helpful for both Kazakhstan and Turkmenistan, and for us it will be additional energy source bringing 16 to 20 billion cubic meters of gas per year.

Q: But is there substantial agreement with the U.S. on how this should be done and what timetable?

MR. PIEBALGS: The United States are not a commercial party. We have established Nabucco Consortium that have all been negotiated with gas producers in Caspian Sea. What we are doing, we are doing feasibility studies. And some feasibility studies are also done by United States. But we are not in consortium in these areas, so there is no timetable where United States should provide us something. That is our task, that's an EU task, to diversify supplies.

Q: I'm Sadahiro with Yomuiru Shimbum, Japanese newspaper. You just mentioned EU's initiative of 20 percent renewable energy by 2020. Here in United States, president announced so-called 20 in 10. That's basically a reduction of gasoline consumption mainly by increasing alternative fuel like ethanol. Do you see some possibility or potential of cooperation, or rather do you see the direction of EU and United States separate?

MR. PIEBALGS: Here I will start by perhaps explaining 20 percent of renewables target. It is the size of renewable energy-primary energy mix. So it includes electricity - that could be around one-third coming from alternative energy sources; heating and cooling; and also biofuels. And biofuels by 2020 will be a minimum 10 percent we have agreed as a mandatory target for inside the European Union.

That cooperation, I see huge possibilities of cooperation, first of all in research for second generation biofuels. We both are looking very much for cellulosic ethanol or cellulosic diesel. So research activities are absolutely necessary because then we increase the feedstocks for producing. So this is one area. Second, it's standards for ethanol and biodiesel, not to create different standards because in this way we will hamper development of the market. Thirdly, we should both work to establish an influence of production of biofuels for the food chain and sustainability, because these are two questions that still are voiced by public opinion. I know about the tortilla crisis, and the second is the rainforest issue. I think these should be answered as soon as possible because if the production of biofuels is unsustainable, then we will do perhaps more damage than positive. So I think these are the issues we agreed to cooperate, and I really believe the biofuels cooperation between the EU and the United States will be exemplary.

MR. SUNDHOLM: Go ahead.

Q: Brian Beary from Europolitics. On the Nabucco pipeline - the pipeline you were talking about just before that was the Nabucco pipeline -

MR. PIEBALGS: Exactly.

Q: - because the Georgian - speaker of the Georgian Parliament, who was here last week, she was basically very worried about this Hungarian move. She basically said if the EU, if you allow this to go ahead, this will be a big, big problem. I wanted just to get your reaction on that.

And also, the Macedonian minister was saying recently what a terrible decision the European Commission made to close these nuclear plants in Bulgaria. There's been a total energy crisis in the region; businesses have suffered; and it was just a disastrous decision. Could you just comment on those two issues?

MR. PIEBALGS: I'll start with first - immediately after we have heard those comments about Hungary, I went to Hungary. I have been there Tuesday, and Hungarian government again confirmed full participation in Nabucco and diversification of supplies. So I believe that the damage has been repaired. And I really know that Hungary is fully behind the Nabucco pipeline. How much power we can use, it's definitely each member country can decide about its own energy needs. So I think each country could decide which project to support or not to support. But Hungary clearly confirmed their support, and I think we should forget that there have been rumors that they were not supporting. They are supporting fully behind Nabucco.

About power station that you mentioned, it is nuclear power station - two units in Kosloduj. And the story goes way far behind the times of Chernobyl. When Chernobyl reactor was damaged and the leaks and the catastrophe happened, there has been a lot of analysis afterwards. Nineteen-ninety-two, the basic statement or basic approach has been formulated that these types - Chernobyl-type of reactors - could never be upgraded to sufficient level of safety, so they are always dangerous. You can decrease, but you can't make them safe. As a result, during the accession negotiations, it was one of the issues member countries - the countries that wanted to join European Union negotiated. And they negotiate actually the timetable when they will close down these nuclear power stations. I think it was early - quite early in the ‘90s when actually the Bulgarian government made the commitment to close, by the end of 2006, both units because of safety considerations. This commitment was confirmed in a letter to me shortly before the end of 2006.

So the closure - what that means is the closure of these two power units have been done on the basis of not sufficient safety and on all the well-known commitment to close that was known four years before. Now to say that closing down is a surprise and that it lacks power, first of all it's not true. Commission is following the situation and there is sufficient level of power for Bulgaria at least, it's quite clear.

Q: For neighbors?

MR. PIEBALGS: For neighbors, the transmission flows have never been too big, actually, and neighbors knew about Bulgarian commitment. So nothing happened. Neighbors did take the necessary decisions in due time and facilitate investment in power sector. Because as a neighbor, actually, they should be very happy that not safe units have been closed down.

So in a way, the basic conclusions I could say, I disagree with Macedonian minister that there was a mistake to close them. I think it was the right decision in right time, well announced, and all the consequences have been analyzed. And the power outages that some countries have faced, they faced during the time when both units in Kosloduj - units three and unit four - have been in the network. So the supply of power, I disagree. So actually it's not justified.

Q: So there's no change?

MR. PIEBALGS: There's no change to be expected, because as I talked, it's a well announced decision. We clearly knew the consequences. It's nothing that was unexpected. And the reasons why it's closed, it was very justified. And for safety of the whole region, it's much better that not safe units don't generate the power.

Q: One of those -

MR. SUNDHOLM: Sorry, you're from?

Q: Joe Hebert, Associated Press. As you know, there has been a lot of discussion in this country, especially since the Democrats took over control of Congress, about cap-and-trade and some regulation of carbon. And very often, the White House says that the Europeans have traded and electricity prices are going up, and it isn't really working and they're not going to meet the Kyoto targets. Did you have any discussions at the White House about this issue, and can you tell us a little bit on how you view the failure or the successes of your carbon trading over the last two years?

MR. PIEBALGS: Actually, I had a lot of discussion about this issue. The question you put was asked also, for example, by Secretary Bodman. So it is an issue that I think it's happy at least that it's getting attention from the United States administration. First of all, we will reach the commitment of 2012 - 8 percent less greenhouse gas emissions compared with 1990. But it's still five years to go. We are now in the second period of emissions trading, and we try to diminish the mistakes that we have done in the first period of three years, because the basic mistake was that we did not know exactly the date when we decided number of allowances to be issued. We used not full date. Now we have verified date about emissions from the year 2005. So all the relevant issues are on very verified and safe date. Second, we also slashed down all the requests for more allowances, so that means that the system is sound. As a result, we have our second period prices - forward prices for one ton of CO2 in the range from 14 to 17 europetrol. So the market price is set.

Now, the accusations that prices are going up. It was the whole purpose of this scheme, because the whole purpose of this scheme, if you use more carbon, your energy source is more expensive. So it encourages investments in clear air resources, or in energy efficiency, or in clean generation. The first period was very short, so we could not see basic consequences, and that's why I think it was a very important decision that we have taken now in March that says after 2012 we continue with carbon trade scheme for long term. We did not say exactly how we construct this scheme, but it will be based on emission trading scheme.

So whoever invests now in the EU power sector must be aware that carbon does have a price, and it will not be less than in second quarter. It will be higher. So we get now next investment done in the clean air coal and more efficient technologies.

Q: So how much did electricity prices increase, or have they increased? 

MR. PIEBALGS: It depends very much on energy mix. In France it didn't increase at all practically because France generation capacity is 80 percent both in nuclear, and there is also huge power. So it was very marginal. In Germany there was increase, about three to four europower megawatt power. So it was not very substantial, but still there was increase in prices, that's true, but that is also purpose of this scheme, that CO2 price - increase of energy price because it's the only way that gives the incentive to invest in -

(Cross talk.)

Q: You mentioned carbon sequestration, how important that is. To what extent was the impact on the coal industry, or the coal utilities?  What have they done?

On investment, it put some hesitation because companies hesitated who were about to invest because they weren't convinced that after 2012 we will continue with this scheme, and that I think brought us to the situation when investment decisions will be made in next - a lot of new investments - in next to five to 10 years. So what companies decided to invest in the meantime?  Mostly in gas - gas generation - because it's very small capital investment, and even if you have high invest prices, you are still very flexible. So that's what happened in our case. But as it was very short term, so that impact to be what we could expect. So gas share growing and coal decreasing, but it didn't provoke, for example, less of the nuclear. You could expect, as a CO2-free source, partially for political challenges, but partially also nuclear investment is around 100 years investment, if I see results of the commissioning cycle.

As a result, there is an emission period that we looked at; it was too short to actually make a decision in favor of the nuclear or market-based basis. And for nuclear, EU approach is no state aid, so you should be aware that there will be carbon price long term, and also political conditions are there to make a nuclear investment, but we haven't seen nuclear investment on the basis of CO2 prices so far.

Q: Can I just make sure - one more question?

MR. SUNDHOLM: Yeah, last one.

Q: To what extent is the hot air issue allowing you to meet the Kyoto - in other words, to what extent are people buying credits or using credits from Russia to meet the Kyoto - as opposed to actual reductions of carbon going into the air?

MR. PIEBALGS: I think with Russia, joint implementation scheme is still not functioning. The only credits we got were through clean development mechanism, something from China, but it's not huge scale. It's not huge scale. For the second period, there is a lot of countries are asking for more CDM credits, like Spain. There will be more influence, but in the first period, it hasn't made huge impact.

Q: Raimund Löw with Austrian Radio and Television. How does the EU see the next step on the international level?  There is this big commitment against global warming from the European side. The Americans have a big discussion on what they should do next. How does the EU see the next steps?  Do they still see America may be able to join Kyoto, or is there some sense of an alternative idea?

MR. PIEBALGS: I think what we are looking for is broad international agreement on fighting climate change. What the modality is is still to be established, but we are clear we are looking forward to the United States are joining us in fight against climate change. I believe EU now is well equipped, but we still need to answer questions that your colleague was asking about credibility that we will reach 8 percent less CO2 emissions. I think that is a very huge test for EU credibility, if we would like to lead, and we would like to lead this way.

But 2007, some international negotiations will start - they should be concluded by 2009 - on the basis, on the debate between all the stakeholders: United States, EU, Russia, China, India. It's a global - we need to find global involvement. And so far, the basic conclusions nowadays with this, nobody is, anymore at least I think on the political level, asking is global warming happening?  Is there climate change?  Should we fight the climate change?  But the global question is - usual question is with any country you are meeting, does another country join it?  And I think that is why the trick is now with a chicken/egg problem so far: I will join if other will join, if other will take responsibility. And we should sort it out but be patient. And for EU I think it is important that it's very clear commitment - not only 2020 commitment but actually 2050 commitment. And partially because of security of supply you do the necessary change in those energy needs by such a type of approach.

But we each need to negotiate, give information. Today there have been hearings in Senate on emission trading scheme. Director for the environment was there, explaining, and I think that is the best person we could send to Washington, and we will continue to do this, participate in the hearings, give information, give positive feedback that we have, negative, but still say that we are committed to it.

And one argument that I think we can use more is the Stearns report on economics and climate change. I think it's very good and a powerful tool to explain that none action means more cost than action. So I think it is how we should construct. We should get political meeting and then constructive scheme, but not reverse it, to come with a cut (?) and then to get everybody on board. We should come from the positive side.

Q: But the medium term goal would be another international treaty or something?

MR. PIEBALGS: Yes, definitely, definitely, because the EU is making only 14 percent of CO2 emissions globally. We are looking that everybody is trying to help it, if not with the same scheme as we are doing. We are not insisting that everybody should use our scheme. We think it is a good scheme because it gives a carbon price and it gives market more force, but if other country will decide a carbon tax, I think it's also good news - a trick. It would be different, but it also could be done. So it's a lot of opportunities and ways how to achieve less CO2 emissions. It's important that countries embark on this way and take binding commitments what they will do. I think it is, in my opinion, would be the best way how to proceed forward.

Q: Yes, I'm Paul Sampson from Energy Intelligence Group. Just a couple of questions regarding the Nabucco project. First of all, do you have any idea when Europe receives the first product of gas?

MR. PIEBALGS: Two-thousand-twelve.

Q: And also, is there any problem, from the EU's point of view, of having gas from Iran go through the pipeline?  I know there have been discussions in the past. Was the American administration telling you not to do it?

MR. PIEBALGS: No, American administration is not saying it, so that - it's definitely as long as nuclear issue and Iran enrichment is an issue, with our relations, EU relations with Iran, we are definitely not advising our companies to go for investments in Iran. It's quite obvious because I think the nonproliferation issues are of such importance that we can't ask our companies to go with Iran in doing the deal. So I think it's obvious because it's EU policies, not United States policies - (unintelligible). But I hope that - and I am confident that this issue will be resolved, and then as a huge reserve on gas is Iran, is definitely - it's very interesting for us to buy gas from Iran, but we will pay for it with the money, and not by subsidized (?) prices, but through the same prices that we are buying gas from other suppliers.

MR. SUNDHOLM: Yes.

Q: Well, just on that note - just to clarify, you said that the administration has not asked you to stay away from Iranian gas. That's what you said. You met with Negroponte, you met with Bodman; have they asked you to ask the European companies that are investing in Iran to stop investing in Iran?

MR. PIEBALGS: No.

Q: Total, Shell, the European banks?

MR. PIEBALGS: I think -

Q: You've talked about the policy, that it was not a good policy, but you're obviously not doing anything about it, in that term.

MR. PIEBALGS: First of all, the United States administration did not speak about this issue with me, so that is the first fact. Second is I thought, it's obvious our policy, we can't encourage investments as long - we have such a very important outstanding issue where basically EU policy is the same as United States policy. So EU, three countries have negotiated with Iran, and still negotiating with Iran to stop uranium enrichment issue.

There have been investments made at some times, so they have been done in different times and we can't say that it's nonexistent, but as far as I know, there is no extension of EU company activities in Iran at this stage.

Q: But you're not telling Norskedro (ph) and Stanoa (ph), which are looking to develop in Iran - you're not telling - well, then Shell, which is also looking to develop - you're not looking at the service companies that are looking at South Pars later; you're not telling them or even considering any legislation that might -

MR. PIEBALGS: No.

Q: - prohibit it. Okay.

MR. PIEBALGS: No, we are not because it is a United Nations sanctions that are very clear we should follow this. But at the same time we are not encouraging companies also to do these investments.

Q: Were you able to convince Alan Hubbard of your views on climate change and the - was there any sort of positive response - in your ideas?  I'm not saying it as a positive or negative, which one, but in your eyes?

MR. PIEBALGS: I think it's a basic argument I try to pass, so it's actually climate change and energy security in the years to come are very closely related because more renewables in energy - more energy efficiency is good for the climate change and also for security of supply. And I think this is so obvious now with sky-high oil prices, that I think it could be arguments that bring our position closer together. At the same time, cap and trade schemes, there's a lot of questions still, so my hope is that all the hearings around will help to convince also on these issues.

Q: But he didn't indicate one way or the other whether they would veto -

MR. PIEBALGS: He didn't.

Q: Last question: In terms of - do you feel the lack of investments in Russia's natural gas, not just pipeline infrastructure but the development of reserves?

MR. PIEBALGS: Well, I am following International Energy Agency, and they definitely are worried about not sufficient investments being made in upstream. We have a long-term supply contract with Russia, with Gazprom, and Gazprom always so far has fulfilled its contractual obligation. And at the same time, I know that the biggest part of the gas is consumed in Russia. Russia has not embarked on a very ambitious reform policy in energy sector, so actually liberalizing its electricity market where the price is going up, and that means less consumption, and less consumption of natural gas, but more importantly, increasing price for gas. And that will definitely make less of gas used in Russia.

On top of it, Russia is working very seriously now with us on energy efficiency issues. So in a way, perhaps with less consumption and biggest bulk of gas is consumed in Russia, there will still be sufficient supplies for exports.

But to be open, I don't question Gazprom's ability to fulfill the contract because still the production is huge. How they will deal with the demand - (unintelligible) - suppliers, it's not my issue. We are working from the assumptions that Gazprom will fulfill its contracts, and then how it invests, we are calling for more open investments to our - for market-based investments, for European companies being able to invest, but still I understand it's Russia that decides the conditions.

Q: So you're not concerned?

MR. PIEBALGS: I am not worried. I am not worried about it. We will get the gas from Russia.

Q: Just one?

MR. SUNDHOLM: A very short one. We have to quit.

Q: Okay, gas OPEC. You said you are for liquid gas markets and all of that, but things don't always turn out the way you expect. So are you preparing for the possibility that the gas producers form a cartel?

MR. PIEBALGS: I think it's - first of all, it's not in their interests because it definitely hampers more producers, first of all, because that is definitely different attitude towards the gas. If gas is not traded in open market - (unintelligible) - EU should embark more dependence on gas and energy. I would advise all the member states, and I will do everything, that we will make more than investment in nuclear, and then we will do more investment in clean coal because you can't allow European consumers to be depended on the cartel, and on gas it could be so - gas is coming through the pipes; one day it's coming, the next day it isn't coming, so I'm very much advising and calling for all the suppliers that it will be damaging for our relations - long-established relations - with the oil and gas states.

So I'm really hoping that this view will prevail. It will do huge damage for gas markets that are still being developed.

MR. SUNDHOLM: Thank you very much for coming.

MR. PIEBALGS: Thank you.