Mikhail Kasyanov has called for a review of the Energy Charter Treaty's transit protocol which he sees as unfair to Russia, saying Moscow should in return loosen its grip on state-owned Gazprom.

The Ukraine-Russia gas dispute in January 2006 highlighted Europe's dependency on Russian gas for 25% of its consumption and prompted the EU to agree on the need for a more coordinated policy with major external suppliers (EurActiv 4 Jan. 2006).

At their annual spring summit in March, EU heads of states and governments have made relations with Russia a key plank of the future common European energy policy (EurActiv 24 March 2006).

Russia has made global energy security the key topic of its G8 Presidency this year.

The EU-Russia energy dialogue is currently on hold but time has come to turn the page and launch a real political and technical dialogue, former Russian Prime Minister Mikhail Kasyanov told a Brussels conference on Wednesday (10 May).

Kasyanov - a liberal and likely candidate for the 2008 presidential election - sees the use of energy as a political weapon as "a big political mistake" by Russia in the January gas dispute with Ukraine. But he says the EU is also to blame for the "general cooling of relations between the west and Russia".

At the forefront of these is the lack of a true EU market for gas and electricity, which Kasyanov says is confusing to Russian businesses and politicians. "What will be the rules of this market?" he asks, wondering what the EU's renewed momentum to diversify energy sources will mean for his country.

He says the Energy Charter, a 1994 treaty that Russia has yet to ratify, is "not taken seriously now" in Moscow because of a regional transit clause (art. 20) which would allow EU companies access to Russian pipelines without reciprocity on the EU side.

"It means that we need a fairer treaty," he argues, with "mutual transit" and "joint energy investment" regimes. He said such a treaty could also include an agreement on access to energy resources in central Asia.

But Kasyanov is also highly critical of President Putin, saying a loosening of Moscow's grip on state-controlled energy giant Gazprom is urgently needed. Reforms in the gas and electricity sector, he said, are "not moving" and standards there currently do not match those which apply to the oil sector where markets are "completely privatised". He says production and transport activities in the gas sector should be separated as is the case for oil.

Christian Cleutinx, a director at the Commission's energy directorate, pointed out that Russia is also a transit country for countries like Kazakhstan and Turkmenistan, implying that Moscow should adopt a consistent stance on transit rules. Cleutinx also insisted on Russia's need for foreign investment and long term supply contracts, pointing out that, at the current production rate, Russia would fail to meet rising EU energy demand.

Erik Berglöf, Chief Economist at the European Bank for Reconstruction and Development (EBRD) predicted a "steep rise" in gas prices as Gazprom struggles to meet rising demand from Europe and elsewhere. The 1% production growth foreseen by Gazprom is "not realistic", said Berglöf, "at least until 2010".

G8 countries have recently intensified the pressure on Russia to ratify the Energy Charter and are hopeful to achieve progress during this year's G8 summit in St Petersburg (EurActiv 13 Feb. 2006).