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EU, Russia to pursue electricity grid link

MOSCOW, Oct 16, 2003 (Reuters)

Russian and European Union power deregulation could pave the way for the two to link their electricity grids by 2007, creating a vast power market from Spain to Siberia, the Russian government's energy chief said on Thursday.

Russia plans to rescind price controls on electricity sometime after mid-2006, while the European Union is to open its power markets in 2007.

"The time frames match," Viktor Khristenko told reporters during a round table on electricity with a senior EU energy official. "It seems fully possible that we can get to work on synchronisation by 2007."

"There is a liberalised electricity market in the European Union and a programme is being realised in Russia to build that kind of market," Khristenko said. "They are built on a single base."

The head of the European Commission's energy directorate general, Francois Lamoureux, proposed Russia and the European Union lay out together each side's obligations and deadlines to link up the grids.

He said the two sides must work out common operating rules and environmental standards.

Russia and the European Union are deadlocked over an EU demand that Russia sell state produced gas to domestic customers at world prices before the European Union will back Russia's bid to join the World Trade Organisation.

Lamoureux said Russia's regulated power prices -- as low as half of some European countries' wholesale rates, largely due to cheap gas -- were not a matter of dispute.

Russia and the European Union are expected to agree on a feasibility study in Brussels next month. Russia's power monopoly, Unified Energy System , and European industry body Eurelectric are already working on a joint study on grid synchronisation.

UES, which can only export power to Finland because its grids are cut off from the rest of Europe, has been pushing for European agreement to re-connect, allowing for two way power flows.

UES has seized on blackouts in northern Europe and Italy to tout grid synchronisation, saying it would provide backup grid and generation capacity for both Russia and Western Europe in case of accidents.

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