Cheney warns Rome over Russia’s energy grip

By Guy Dinmore in Rome

Financial Times | Last updated: September 8 2008, 13:10

Dick Cheney, the US vice president who is on a four-country mission to counter Russia’s projection of power following its invasion of Georgia, reiterated his warning to Italy on Monday that Moscow should not be allowed to dominate energy supplies to Europe.

Mr Cheney met Giorgio Napolitano, Italy’s left-wing and largely ceremonial president, at his Quirinale palace in Rome before some scheduled sight-seeing in the ancient Etruscan town of Orvieto. He was due to meet Silvio Berlusconi, centre-right prime minister, on Tuesday.

Visiting Azerbaijan, Georgia, Ukraine and Italy, Mr Cheney’s message to Russia has been to withdraw its troops from Georgia and behave in line with international norms or risk derailing its economic development. In parallel, Mr Cheney is telling Europe to lessen its dependence on Russian gas.

A senior US official travelling with Mr Cheney told reporters: “Russia has worked hard to try to corner the (energy) market, so to speak, and is working to foreclose options to transit for those energy products across Russia.”

“They want everything to come out through Russia and a lot of us think it’s more important that there be diverse means of gaining access to those resources,” he said, quoted by Reuters and speaking on condition of anonymity. “No one country ought to be able to totally dominate those deliveries.”

Italy is in a particularly sensitive position, heavily reliant on energy imports and trying to diversify its sources. Eni, the part state-owned energy company, has entered into the South Stream project with Russia’s Gazprom to build a new pipeline that would take Russian gas under the Black Sea to eastern Europe and beyond to the Balkans and Italy.

Glen Howard, president of the Jamestown Foundation, a Washington security think-tank, believes Mr Cheney wants “to drive a stake through the heart of South Stream”.

The US is throwing its weight behind the Nabucco project which would take gas from Azerbaijan and possibly Turkmenistan to Europe, bypassing Russia. The Bush administration is concerned, however, that Azeri gas will be sold to Russia instead.

European energy executives argue that the two proposed pipelines should not be seen as rivals as projected demand for gas will easily absorb both. In meetings with Mr Cheney over the past week, they have also expressed concern that Russia’s invasion of Georgia last month risked interrupting oil supplies through the Baku-Ceyhan pipeline that transits Georgia, and might jeopardise Nabucco in future.

The Jamestown Foundation noted that Russia’s energy ministry has doubled the estimated cost of South Stream to $20bn, making the project less interesting for investors compared with Nabucco.

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