Talks between Russia and the European Union on the EU Third Energy Package, which requires the separation of energy production, transportation and sales, are deadlocked, Energy Minister Sergei Shmatko said on Monday.
The Third Energy Package particularly affects Russian gas export monopoly Gazprom, which produces and sells gas and owns transportation facilities.
"Unfortunately, I must say that our talks with the European Commission on how Russian interests could be respected within the current European legislation, the Third Energy Package, have reached an impasse," Shmatko told an energy forum.
The European Commission rejected all suggestions brought forward by Russia, which wants a modernized infrastructure, long-term contracts that would ensure steady payments and clear price formulas, Shmatko explained.
"All these things are sacred cows in a way. It will be difficult for us to abandon them," Shmatko said.
Gazprom's prices on long-term gas supply contracts have long been subject of heated debates with European partners, in particular E.ON, RWE, which want a spot price mechanism to obtain cheaper gas. In July, Gazprom made concessions to Italy's Edison S.p.A, which was the first to file a court suit against Gazprom. It dropped the suit after Gazprom agreed to introduce a spot element into the price formula.
President Dmitry Medvedev has said that the Third Energy Package creates problems for gas cooperation between the EU and Russia.
In September, the EU authorities initiated searches at Gazprom's European units on suspicion that the Russian gas giant was involved in or had information concerning uncompetitive practices.