Increasing political pressure is being applied on eastern European governments t ...

Increasing political pressure is being applied on eastern European governments to raise fuel prices so as to improve their environmental performance and promote investment in energy efficient industries, writes Keith Nuthall. The United Nations Economic Commission for Europe recently addressed the issue, with its Committee on Sustainable Energy and the Committee on Environmental Policy agreeing to produce guidelines on price reform. The meeting also received a report claiming that former Soviet Republics in the Commonwealth of Independent States have an enormous potential for energy conservation, estimated at between 600mn and 650mn toe - well over half their annual total energy consumption. The Sustainable Energy Committee also debated the need for holistic energy policies that boosted security of supplies by strengthening the rule of law in eastern European countries, protecting commercial contracts and improving the business climate. Other recent EU petroleum news includes the fact that the European Commission has decided to close part of its Marathon competition case after German gas company Thyssengas promised to improved access to its pipeline network. Brussels, however, will continue to investigate other companies involved in an alleged joint refusal to grant Norwegian gas producer Marathon access to continental European gas pipelines in the 1990s. The case was triggered by a complaint from US-owned Marathon, which was withdrawn after a commercial settlement. Brussels, however, continued the investigation. Meanwhile, the Commission has authorised the takeover of British company Powergen by Germany’s E.ON AG. Powergen supplies gas and E.ON has both oil and gas interests. Brussels has also launched a formal state aid inquiry into exemptions from excise duty on heavy oils used for aluminium production in Ireland, France and Italy, claiming that it breaks the EU Directive harmonising these taxes and so could be an illegal subsidy. The European Parliament’s Environment Committee has called for the mandatory introduction of sulfur-free petrol and diesel fuel by 1 January 2008, three years ahead of the deadline proposed by the Commission in its draft directive on fuel quality. Its proposed amendment would also lead to off-road machinery and farm tractors being covered by the legislation. Agreement in principle has been secured at the European Union Council of Ministers over a directive that will limit air pollution from recreational boats and jet skis in the EU, further increasing demand for cleaner fuels. And the European Commission has been given authority to negotiate a trade deal with Iran, which will inevitably focus on the access to EU markets of its vast oil and natural gas reserves. The European Bank for Reconstruction and Development has drawn up plans to lend euro 33mn to Russian company Stimul, to develop the East Orenburg oil field in south central Russia, increasing production to 20,000 b/d.