MADRID (AFP) -- The separation of energy producers and distribution networks in the EU is the biggest energy policy priority for the European Commission, Energy Commissioner Andris Piebalgs said Thursday.

"First of all is ownership unbundling," Piebalgs told an energy conference here. The Commission believes that breaking the link between energy suppliers and the operators of distribution networks is required to introduce competition in energy markets. The "unbundling" of supply and distribution, two functions carried out by monopolistic companies in many countries, is seen as necessary to enable new suppliers to enter national energy markets.

French Industry Minister Francois Loos said in an interview published Thursday in the Financial Times that the proposed separation of European energy producers and distribution networks would harm the EU's strategic interests.

France is to circulate a document to EU officials ahead of a meeting of the energy council in Brussels on February 15 warning that such measures could weaken European energy groups at a time when size was necessary in negotiations with gas and other fossil fuel suppliers.

Loos told the FT that he was planning to propose a system of "regulated unbundling," where an independent regulator would set prices for access to energy grids and would review investment decisions, similar to the system in place in France