By Tanya Mosolova MOSCOW, Dec 8 (Reuters) - Russia and the European Union on Friday backed energy efficiency measures to save more than 400 million tonnes of oil equivalent each year by 2020 -- similar to adding two more Irans to world oil supply. But the Moscow meeting of Russian Energy Minister Viktor Khristenko, EU Energy Commissioner Andris Piebalgs and Trade Minister Mauri Pekkarinen from EU President Finland recognised there was a "huge mutual challenge" as well as potential. The European Commission has already unveiled a plan for the EU to cut its own energy use, involving more efficient buildings, cars, power generators and appliances. A report by a joint EU-Russia energy efficiency working group has said Russia could also halve the energy intensity of its economy by 2020 via similar energy saving programmes and by cutting down on gas flaring and wastage and losses in industry. The EU and Russian leaders said they had agreed to join their efforts to promote energy efficiency and would use the report as a basis. Pekkarinen said the meeting had prepared the ground for a better understanding of what could be incorporated in the energy part of an eventual EU-Russia agreement. "Energy efficiency is clearly the key priority in our future cooperation," he said. "Russia is the EU's most important energy supplier. We are mutually interdependent. We agreed on the need to develop mutual confidence and openness." Energy is at the heart of EU-Russia diplomacy, with Russian producers relying on European demand as much as European consumers depend on continuing supplies from Russia, which has been the world's top oil producer in recent months. But Russian industry, much of it born under an inefficient Soviet economy which did little to ration energy use, is among the most ineffecient in the world. Figures from the International Energy Agency show Russia uses about 10 times more energy to produce one dollar of gross domestic product than the average in the OECD group of industrialised countries. Improving efficiency could free up more energy for export, increasing both revenues to Russia and supplies for the stretched world market, which has seen record high oil prices in the past year. Russia has struggled to increase exports of both crude oil and gas, and analysts say huge investments will be needed to lift output enough to raise exports, while the booming domestic economy soaks up more and more energy resources. Russia produced almost 40 million tonnes (9.75 million barrels) of oil per day in November as well as 57.5 billion cubic metres of gas, making it by far the world's biggest energy producer. But more than half of its crude oil goes to domestic refineries and less than a third of its gas finds its way to export markets.
