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Mon 4 May 2009 07:56 PM

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Euro summit eyes Iraq energy ties

'Silk Road' summit later this week expected to agree to make more effort to further develop EU-Iraq energy ties.

Europe should rapidly bolster energy ties with Iraq and sign a deal with Turkey by June in its quest to develop a new "southern corridor" for gas imports, leaders and ministers are expected to agree later this week.

The European Union's Czech presidency will host a summit of European and Central Asian countries in Prague on May 8, seeking to smooth the path for eventual gas imports from central Asia to help reduce Europe's heavy dependence on Russia.

The 27-nation EU has become increasingly uneasy over energy security since a row in January between Moscow and transit country Ukraine led to a cut in supplies to Europe in the depths of winter.

Tensions have risen further since NATO expelled two Russian diplomats last month, and announced military exercises in Georgia, which fought a brief war with Russia last August.

The "New Silk Road" talks in Prague will aim to convince leaders from Central Asian supplier countries such as Azerbaijan and Turkmenistan that the EU is a serious gas customer.

"For those countries, the EU has for 15 years just been talking and not being serious," said an official of the Czech EU presidency. "We are trying to persuade people in the EU to put their money where their mouths are."

An early draft of a declaration prepared for leaders on Friday said: "We agree ... for the EU and Iraq to sign a memorandum of understanding on energy as soon as possible."

Iraq is seen as a promising new source of gas for the proposed Nabucco pipeline, which has so far been focused on carrying Azeri gas but has only sourced one fifth of that needed to justify its construction.

Haggling over the transit of gas to Europe could delay the development of some Azeri gas for Nabucco until 2016, two years beyond its initial launch date, Azeri suppliers said last month.

The draft called on EU member states involved in Nabucco to end that wrangling and to sign an intergovernmental accord with transit country and EU candidate Turkey by June.

That step would clear one of the main obstacles potential investors face in planning for Nabucco and would also improve clarity for the rival ITGI project, which would bring gas from Turkey to Europe via Greece and then Italy.

An intergovernmental agreement for ITGI should also be signed this year, said the draft, which could yet change as the meeting approaches.

The meeting on Friday will come a day after a summit to launch the European's Union's Eastern Partnership project with Ukraine, Moldova, Belarus and other energy transit states.

The Czech EU official said that after years of wavering, Europe had no time to lose in securing alternatives to Russian gas.

"The risk is simple - that Azerbaijan will sell its gas to Russia, and Turkmenistan will be pushed to sell to Russia or Iran."

"How can you create a gas market, or any market, if you have one or two inputs," the official added. "The only thing that will happen is that prices will skyrocket." (Reuters)

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