Blackmail fear after Russia doubles price of its gas

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Blackmail fear after Russia doubles price of its gas 
Deal came within hours of threat to cut off supplies to former Soviet republic

Fears that Russia is using energy supplies as a political weapon increased last night after Moscow forced Georgia to accept a doubling of gas prices.

The deal came within hours of a threat by Gazprom, Russia's statecontrolled energy giant, to cut off supplies to the former Soviet republic from January 1.

Georgia had called the price increase 'unacceptable' and 'politically motivated'.

Relations between the Kremlin and Georgia's pro-West leadership were already at their worst for a decade after a spy row in September.

The Georgia 'agreement' is another example of what alarmed EU officials see as the Kremlin's heavy-handed tactics in dealing with energy clients.

It came the day after Gazprom took control of a massive oil and gas project from Royal Dutch Shell, which had suffered a long campaign of bureaucratic harassment.

Gazprom has 25 per cent of the EU gas market and is aiming for 33 per cent by 2010. The company is also investing in distribution as well as supply.

In the UK, it bought Pennine Natural Gas, a small marketing company, this summer, and there is speculation that it wants to take over Centrica, the owner of British Gas.

While Gazprom insists its motives are commercial, critics say it often acts as a political instrument for Russian president Vladimir Putin.

European analysts said it was clear Russia had used threats against Georgia. Turkey was also said to have been warned not to help the Georgians.

'These signs are all very worrying,' said one EU diplomat in Brussels last night. 'They show Moscow has no qualms in wielding the big stick if it does not get what it wants.' A similar price rise demand led to massive cuts in Russian supplies to Ukraine in January.

This also reduced the amount of Russian gas reaching Europe, prompting some European leaders to question the continent's reliance on Russia as its major supplier.

Gazprom is still involved in a dispute with Belarus, which serves as a transit route for Russian gas to Poland and Germany.

It said yesterday it hopes to solve the wrangle - over prices and control of pipelines - by December 31.

Though the Russians said Georgia had agreed to the new prices for a year, Georgia's prime minister Zurab Nogaideli said it would be for only three months. He said Georgia had planned to import more gas from Azerbaijan, but this had been delayed for several weeks due to technical problems.

'We are forced to buy from Russia; it is just a short-term solution,' he told a news conference in the capital, Tbilisi.

Georgia has also been hoping it can take some of the gas Azerbaijan currently supplies to Turkey.

President Mikhail Saakashvili went to Ankara this week to try to persuade Turkish leaders to agree, but without apparent success.

Turkey receives most of its gas from Russia and an industry source in Moscow said: 'Turkey has been told it would not get additional gas and could face price increases if it decided to help Tbilisi.'

• The cultural section of the British Embassy in Moscow has decided to stop offering English classes after Russian officials suddenly decided it needed a teaching licence.