Russia sets Moldova gas ultimatum amid EU price row
(MOSCOW) - Russia told Moldova on Wednesday to sever its natural gas ties with the European Union in exchange for a discount in prices whose rise has sparked an explosive new probe by Brussels.
The flat and very public ultimatum to a poor ex-Soviet minnow that is almost entirely reliant on Russia's state-owned Gazprom export monopoly deepens long-standing tensions between Moscow and the cash-strapped 27-nation EU bloc.
The EU Commission suspects the behemoth of hindering competition by abusing its monopoly status in the three Baltic nations and at least five countries from the Cold War-era Warsaw Pact.
Moscow for its part accuses the European Union of trying to force Gazprom to subsidise weaker eastern European economies that joined the European Union in the past 10 years.
Moldova's last contract with Russia was signed after a brief interruption in supplies during 2006 price negotiations. It is up for renewal this year.
Energy Minister Alexander Novak said the first thing Russia now wanted was for Moldova to formally renounce its energy contacts with Brussels.
"We believe that Moldova must first denounce the protocol on its entry in the EU Energy Charter Treaty," Novak said in reference to a documents that hinders Gazprom current European pipeline ownership plans.
"This is a condition under which we can examine the issue of reducing the price of gas for Moldova," he added during a visit by Moldovan Prime Minister Vlad Filat, quoted by Russian news agencies.
News reports said Novak was willing to discuss a 30 percent discount from a standard Western European rate of $392 per thousand cubic meters ($11.10 per thousand cubic feet) charged by Russia.
The expiring contract provided for varying levels of prices that were gradually raised to meet those set by Gazprom for richer or less cooperative nations such as Ukraine.
Moldova is one of a host of countries almost entirely dependent on Russia for their natural gas. A Gazprom subsidiary already operates its gas supply and distribution network despite partial ownership by the state.
Gazprom's practice of ignoring so-called "hub" prices set by the market and locking in long-term oil-indexed rates that often come out much higher has upset EU nations enough to launch a politically explosive probe.
Russian President Vladimir Putin took the symbolic step on Tuesday of issuing a decree that protects Gazprom and other "strategic" firms from having to disclose their secrets to foreign authorities without government approval.
But EU officials already have access to volumes of documents they uncovered during a series of unprecedented raids on the offices of Gazprom subsidiaries and trading partners last year.
The Russia energy minister said he was concerned that Gazprom might have to give up its Moldovan network by 2015 should the nation adopt strict European rules barring suppliers from also distributing energy products.
"Obviously, this does not suit us," said Novak.
The Moldovan prime minister assured Putin at a separate meeting that he "expected energy relations to continue along their constructive strategic partnership lines" -- comments reflecting a long-term commitment to Gazprom.
Putin for his part hinted that Moscow might be swayed to lower its import barriers to popular Moldovan wines that were banned outright during two recent tough patches in relations in 2006 and 2010.