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Czech Republic: Norwegian Gas Deal Final Step In Energy Independence

Prague, 20 March 1997 (RFE/RL) - Yesterday's announcement that the Czech Republic will begin importing Norwegian North Sea natural gas represents the third and final stage in Czech attempts to achieve a measure of energy independence from Russia by diversifying the sources of its strategic energy supples.

First, soon after the collapse of Communist rule in 1989, the Czechs decided to continue constructing the Soviet-designed Temelin nuclear power station but decided to use western technology from the US firm, Westinghouse.

Second, already six years ago, the Czech government began looking for alternative sources of oil and gas. Early last year, oil started flowing through a newly built $500 million pipeline from Ingolstadt in Bavaria to an oil refinery at Kralupy just north of Prague, providing the Czech Republic with 20 percent of its oil needs.

And finally, negotiations with various Western natural gas suppliers over the past year and a half culminated with yesterday's announcement that three Norwegian companies, Statoil, Norsk Hydro and Saga, all members of Norway's Committee for Natural Gas (GFU), will supply the Czech Republic with North Sea gas starting May 1.

Czech Industry and Trade Minister Vladimir Dlouhy yesterday told a session of the Norwegian-Czech Economic Forum, attended by visiting Norwegian King Harald V, that final negotiations are over, an agreement has been reached and the contract is ready for signature.

The deal, due to be confirmed by the Czech cabinet next Wednesday, calls for Norway to supply a total of 53,000 million cubic meters of natural gas to the Czech state-owned gas monopoly Transgas over the next 20 years. This year, Norway will deliver 700 million cubic meters of gas, just over seven percent of expected Czech gas demand.

Czech President Vaclav Havel said after meeting with King Harald two days ago that the decision to purchase natural gas from Norway may have been speeded up by recent statements by the Russian Ambassador to Prague, Nikolai Ryabov. The Russian diplomat told Russia's NTV television Sunday that Czech membership in NATO could have a negative impact on Russian deliveries of gas and nuclear power technology.

"It is already causing problems for the future between our countries," said Ryabov.

Russia's gas monopoly, Gazprom, is contracted to supply the Czech Republic with nearly 88 percent of its gas requirements. The balance (5%) is coming from a German affiliate of Gazprom, Wintershall.

The Norwegian gas will be pumped from the North Sea to the German port of Emden and from there through existing German pipelines to the Czech border. Czech officials say German transit fees, not yet agreed on, are the final obstacle to signing a contract.

Statoil marketing chief Egio Haaland told reporters in Prague yesterday that the Czech contract gives Norway cause for optimism in its attempts to get into the Polish and Hungarian gas markets.

Following yesterday's deal, the only two European countries, not ex-Soviet republics, that are entirely dependent on Russian oil are Slovakia, which has declined to diversify its energy sources in favor of a closer relationship with Russia and Turkmenistan, and Finland, which is isolated from the European gas pipeline network.

Russia's Gazprom tried to head off the Czech move to diversify last December by offering to accept Czech-made goods as payment for a portion of any additional gas supplies required by the Czech Republic. But to no avail.

Czech negotiators say Gazprom officials have warned that Czech exports to Russia would suffer if Gazprom loses its monopoly on gas supplies. But competing offers for gas deliveries came from such western suppliers as the British Gas, Germany's Ruhrgas and the Netherlands' Gasunie, some of which involving the resale of Russian gas.

The Norwegian offer does not any resale of Russian gas. It was seen as a blow to Moscow's interests. But the Czech government decided it could not risk being entirely dependent on Russian gas for another 20 years and a gathering of government ministers last Thursday gave the go-ahead to conclude an agreement with the Norwegians.

Czech Prime Minister Vaclav Klaus said after meeting the Norwegian monarch yesterday taht the decision to import Norwegian natural gas is "correct and final." Czech Foreign Minister, Josef Zieleniec says the Norwegian deal is a "key strategic decision."

An editorial today in the Czech business daily "Hospodarske Noviny," entitled "Ryabov helped the Norwegians" says the Czech Republic has made a significant decision by extricating itself from the situation in which Russia had on gas deliveries and granting a share of its market to Norwegian suppliers. The paper said: "this is a highly strategic move, influenced by politicians, but not exceeding pragmatic economic interests." It went on to quote an unnamed senior Czech gas official as saying "paradoxically, it was the Russian Ambassador, Mr. Ryabov, who convinced those who were still wavering whether we should take gas from the Norwegians and not just from the Russians." "Hospodarske noviny" concluded "the Czech government found the courage to say that relations with Russia will be partnerly for both sides; there is nothing left but to believe that Moscow's representatives have the same view."

The left-wing Prague daily "Pravo" today said that Czech Ambassador to Moscow, Lubos Dobrovsky, expects Gazprom may respond to the Czech-Norwegian deal by mounting lobbying effors against Czech economic interests. The paper noted that Czech Finance Minister Ivan Kocarnik failed to make any progress during his recent visit to Russia in discussions on transit across Russia of Kazakh natural gas bound for the Czech Republic.

Dlouhy's deputy, Josef Dobruska, who also heads the energy department at the Czech Ministry for Industry and Trade, says that while Gazprom's current contract with Transgas runs through next year, work is already underway on a new 15-year contract.