Berlusconi to discuss pipelines at Putin party

By Guy Dinmore in Rome, published on FT on Oct 20, 2009

A private birthday party on the shores of Lake Valdai, south of St Petersburg. Silvio Berlusconi, Italy’s prime minister, has already bought a present for his close acquaintance, Vladimir Putin, and their two-day meeting this week is expected to focus on Russia’s controversial plans to build two more gas pipelines to Europe.

Franco Frattini, Italian foreign minister, confirmed to the Financial Times yesterday that Mr Berlusconi is expected to fly to St Petersburg tomorrow (Wednesday). He said he did not have a guest list or details of the Russian prime minister’s birthday celebrations.

However, Il Giornale, a newspaper owned by the Berlusconi family, reported that the two prime ministers would discuss geopolitics and energy. It compared the occasion to a meeting in 2007 that was also attended by Gerhard Schroeder, former German chancellor and now chairman of the Nord Stream gas pipeline project , as well as Jacques Chirac, former French president.

Mr Schroeder is also expected to attend the private event marking Mr Putin’s 57th birthday which was actually on October 7, Il Giornale reported. Mr Schroeder was not available for comment.

The then Bush administration only learned of the secret 2007 meeting months after the event. Details were scarce. Diplomats said concerns were raised among Washington’s conservatives, in particular Dick Cheney, then vice president, over Russia’s plans to increase Europe’s dependency on its gas while undermining the separate US-backed Nabucco pipeline project to take gas from the Caspian and central Asia to Europe.
Nord Stream would link Russia directly to Germany under the Baltic, bypassing the Baltic states. Nord Stream could start pumping gas directly to Germany under the Baltic Sea at the end of 2011 but its construction depends on the co-operation of countries with territorial waters along the route.
South Stream – a joint venture between Russia’s Gazprom and Italy’s Eni – would pipe gas direct from Russia under the Black Sea to Bulgaria and on to central and southern Europe. Russia’s principal motive is to bypass Ukraine, which is the transit country for 80 per cent of Russia’s gas exports to the EU. As became obvious in January, in the latest flare-up of its long-running dispute with Ukraine over gas prices, Russia has no way to cut off the gas to Ukraine without also cutting off most of its European customers.

Mr Berlusconi was in Sofia last week to discuss South Stream with Boyko Borissov, Bulgaria’s newly elected prime minister.

Mr Frattini said Italy had addressed Washington’s concerns over South Stream during a visit earlier this month by Claudio Scajola, economic development minister.

The foreign minister pointed out that Italy was much less dependant on Russian gas than other European importers and was actively diversifying its purchases. He said Italy imported 30 per cent of its gas from Russia, 28 per cent from Libya and 20 per cent from Algeria. He noted yesterday’s formal opening of the Adriatic offshore regasification terminal which will bring Qatari gas to Italy.

“Nabucco, in order to function, has to have gas that today is not there,” Mr Frattini said, noting that Azerbaijan does not have sufficient gas to fill the pipeline at present, and that other potential sources, such as Iran, are problematic.

Separately in Milan yesterday, Eni and Turkey’s Calik signed an accord to build a 550-km pipeline linking Turkey’s Black Sea and Mediterranean coasts. Igor Sechin, Russian deputy prime minister, was reported as saying that Russia was ready to provide oil from the Black Sea and Caspian areas to feed the pipeline.