Tuesday

21st Feb 2017

Signs of tension after EU move on Gazprom

  • EU and Russian leaders at the launch party for Russia's Nord Stream pipeline last year (Photo: nordstream.com)

The European Commission says its probe into suspected price-fixing by Gazprom has nothing to do with EU-Russia relations. But Gazprom says it does.

Commission spokesman Antoine Colombani in Brussels on Wednesday (5 September) took pains to portray the investigation, unveiled on Tuesday, as a run-of-the-mill commercial matter.

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When asked if the Russian authorities had reacted to the move, he said: "To clarify, this is an investigation which concerns Gazprom, which is a company active in the EU single market, which sells gas to the EU, and so we are looking at the behaviour of this company. This does not concern Russia."

He noted that it involves Gazprom activity in eight EU countries - Bulgaria, The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.

But he reiterated: "This is an investigation into a company [Gazprom] and its relations with other companies ... We do not deal with member states directly."

He also tried to take the spotlight off Lithuania, a former Soviet outpost which has rotten relations with Russia and which first called for EU action against Gazprom last year.

Colombani said the commission decided to act not just because of Lithuania, but also due to its own "monitoring" and due to information from "market players." He added that the commission case "relieves [EU] national authorities from doing their own investigations."

The Kremlin had as of Wednesday afternoon said nothing on the subject directly.

But a communique from Gazprom's "information division" shortly after Colombani's press briefing indicated that the state-owned firm sees the affair in a different light.

The company said it "scrupulously abides by all the provisions of international law and national legislation in all of the countries where [it] conducts business."

It added: "We expect ... it will be taken into account that Gazprom, registered outside the jurisdiction of the EU, is a business entity empowered, according to the legislation of the Russian federation, with special social functions and a status of a strategic organisation, administered by the government."

Meanwhile, at least one aspect of the investigation is likely to touch on international relations.

Part of the probe is to look into Gazprom behaviour which "prevented the diversification of supply of gas."

Bulgaria just last week agreed a double-barrel deal with Gazprom to build the so-called South Stream pipeline through its territory at the same time as getting an 11 percent price cut.

South Stream is Russia's answer to Nabucco, an EU-backed pipeline scheme to end Russia's monopoly on Caspian-Sea-region exports.

The commission's energy spokeswoman, Marlene Holzner, at the same briefing on Wednesday said that if the Bulgarian deal violates EU law the commission can launch "infringement proceedings" to get it changed.

Given Russia's track record of cutting off energy supplies to settle disputes with Belarus, Lithuania and Ukraine, she noted "there is no indication whatsoever from the Russian authorities that there is a problem for deliveries of gas to Europe" in the coming winter.

Holzner added that if any EU supplier does cut off gas because of "a technical thing, or whatever," EU countries have been told to stockpile at least 30 days' worth of the fuel.

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With Nord Stream's construction now a foregone conclusion, questions are being raised as to what its launch will mean for the European gas market. Given present market conditions and the ongoing processes of the European market liberalisation and integration, Nord Stream opening may contribute to gradual change in the way Gazprom is doing business in the EU, write Agata Loskot-Strachota and Lukasz Antas.

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