Gas truce sparks talk of EU energy pact

Russia and Ukraine agreed a five-year gas supply deal yesterday, easing fears of impending shortages in continental Europe and prompting talk of new EU policies to head off supply problems in the future.

Reacting to the deal between Russia's Gazprom and Ukraine's Naftogaz, top EU policymakers signalled the need for less reliance on Russian gas and even raised the notion of a drawing up a common European energy policy.

"We will have to learn the lesson of what has happened in the past few days," said Martin Bartenstein, the Economy Minister of Austria, which holds the EU presidency. Speaking after a meeting of EU energy experts, Mr Bartenstein said he hoped the Russia-Ukraine agreement "will ensure ... the long-term security of supply of gas to the European Union", but added the bloc should wean itself off its Russian source. "Diversification in terms of pipeline systems is something to work on," he said.

The EU's energy commissioner Andris Piebalgs went further, raising the prospect of a common energy policy for Europe. The EU needed "a clearer and more collective and cohesive policy on security of energy supply", he said. He promised a paper "on a new European energy policy" in the spring, with proposals to follow by the end of the year. Trevor Sikorski, energy expert at the industry analysts Global Insight, said the commissioner's talk of a new EU policy in this area was "bold". The idea of a common policy was "hardly likely to go down well" he warned. "There'll be a lot of political resistance towards handing energy policy over to Brussels in totality." Where the Government may agree to more EU involvement would be in ensuring more liberalised access to each others' gas markets. Tony Blair first raised this issue in earnest at the UK-hosted EU summit in Hampton Court last year.

Reaction from Moscow to the deal was enthusiastic. Oleg Morozov, deputy speaker of the Russian Duma, called it "a victory for common sense" and a "major political compromise in the interests of Russia and Ukraine and also our European partners".

But when examined closely, the deal looks like a surreal face-saving solution, which allows both sides to claim satisfaction but hands more of a victory to Ukraine. Kiev had insisted it would not pay more than $80 (£40) per 1,000 cubic metres so the final compromise figure it will actually pay, $95, is palatable, and a long way from the $230 price tag put forward by Russia.

The Russian President Vladimir Putin was involved in behind-the-scenes efforts to solve the crisis and his decision to compromise is likely to have been influenced by the adverse publicity the row generated as Moscow took over the G8 presidency for the first time, a role it is keen to make a success of. The fudged nature of the deal allows him to present it to his people as a success and sends a signal to the international community that Russia cares about how it is perceived abroad and does not want to be seen as a bully.