EUROPEAN ENERGY CHARTER SEEKS TO ATTRACT OUTSIDE MONEY

Dec. 23, 1991
More than 40 countries last week signed a European energy charter designed to steer foreign money and expertise into energy development in eastern Europe and republics of the former Soviet Union. A key provision will ensure that non-Soviet companies can repatriate profits and protect them from expropriation. The charter, brainchild of Netherlands and signed in The Hague, sets out principles that will be fleshed out as protocols covering various aspects of energy are agreed on sector by sector.

More than 40 countries last week signed a European energy charter designed to steer foreign money and expertise into energy development in eastern Europe and republics of the former Soviet Union.

A key provision will ensure that non-Soviet companies can repatriate profits and protect them from expropriation.

The charter, brainchild of Netherlands and signed in The Hague, sets out principles that will be fleshed out as protocols covering various aspects of energy are agreed on sector by sector.

Negotiating the sectors, including the one on hydrocarbons, is expected to take at least 1 year. Protocol Four, covering hydrocarbons, aims to set out conditions under which western operators will be able to take part in developing oil and gas reserves in the former Soviet Union.

Signatories included European members of the Organization for Economic Cooperation and Development, the U.S., Canada, Japan, Australia, the former Soviet satellites in eastern Europe, and the former Soviet republics.

Britain's energy secretary, John Wakeham, said the charter's provisions for investment protection and competitive energy markets will encourage investments needed in the Soviet republics and eastern Europe.

"The charter also will lead to major environmental and efficiency improvements," Wakeham said. "In particular, raising energy prices to market levels, together with transfer of modern technology, will reduce waste and pollution."

At a press conference in Paris, Peter D.S. Hadfield, Royal Dutch/Shell Group planning coordinator, said rather broad principles of the charter are intended to ensure conditions under which private investment could be made in the former Soviet Union.

Oil companies are now interested in implementation of the principles.

Hadfield said, "We believe in a free market, and if the charter opens trade with eastern Europe that would be fine. But we want no bureaucracy and centralized planning."

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