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U.S. Envoy: Russia Would Not Cut Off Gas To Europe

ROME, (Reuters) -- European dependence on Russian gas is dangerous partly because of future supply shortfalls, not because Russia may cut off supplies over tensions with the West, the U.S. envoy for Eurasian energy diplomacy said on October 10.

"I don't think it would do that [cut off supplies]. It hasn't done that to Western Europe in the past and I don't think it's going to do it intentionally," C. Boyden Gray said.

Gray, speaking to reporters at the U.S. Embassy in Rome, said he believed the strong U.S. and European response to Russia's brief war with Georgia in August had reduced the risk that Russia posed to its neighbours.

"I don't think we anticipate more trouble," Gray said. "What we're doing now is trying to make sure that there is no inhibition on the part of either the producing countries in the Caspian or the transit or the consuming see greater hydrocarbons come through to the West."

A big problem for Europe, in Gray's view, is an overdependence on supplies from Russia while investment falls.

"We see a reduction in the development that is taking place, a potential reduction in their own oil and gas production, which could hurt Europe in the not too distant future if it's not remedied," he said.

He expressed confidence that the Nabucco pipeline, which is supported by the European Union as a way of reducing its heavy dependence on Russian gas, would be built "eventually."

The pipeline is due to bring 30 billion cubic meters of Caspian and Middle Eastern gas annually from Turkey to an Austrian gas hub via Bulgaria, Romania, and Hungary.

A series of agreements were due to be signed earlier this summer but has been postponed due to Turkey's foot-dragging at the bargaining table, analysts have said, in order to gain rights to import a portion of Nabucco gas for its own domestic use.

"They [the Turks] are worried about heating their own there is a little bit of bargaining going on back and forth between the various countries involved here and we're trying to facilitate the talks," Gray said.

He said another pipeline project called TGI could move ahead faster than Nabucco.

"It's probable that TGI will be developed first, because it takes less gas to make it viable. But I would think over time, Nabucco will eventually get built," he said.

He expects progress within six months on a pipeline deal involving transit through Turkey but declined to say which one.

"I didn't say which one. I just said I think there will be an understanding for transit through Turkey for a pipeline," he said. "Firm, completely firm details with shovels in the ground, no. But the outlines of a deal, yes."