Friday

20th Apr 2018

Kremlin backs its dog in EU-Gazprom fight

  • Gazprom's shares took a further hit on news of the EU investigation (Photo: davidgordillo)

The Kremlin has started putting pressure on the EU for a friendly "settlement" on Gazprom one day after the European Commission said the affair is a purely commercial matter.

Speaking in an interview with the Wall Street Journal on Thursday (8 September), Russia's EU ambassador, Vladimir Chizhov, said: "We always favour negotiated solutions because nobody wants a gas war."

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

He added that if Gazprom "reaches some kind of agreement, be it with the commission, or be it with member states, or be it with European energy companies ... I would only welcome it."

Echoing Gazprom's statement earlier this week, which indicated the firm is too big a deal for EU officials because it is a Russian "strategic organisation," Chizhov poked fun at Brussels' regulatory ambitions.

"The European Commission can look into anything it wants: whether there is life on Mars or whether there are some irregularities in Google or Gazprom or Microsoft," he quipped

The ambassador also described the anti-trust probe as an "irritant" in EU-Russia's "strategic partnership."

For his part, Russian President Vladimir Putin's spokesman, Dmitry Peskov, also on Thursday told Reuters in Vladivostock: "There is no talk about retaliation measures. Gazprom has in the course of many decades proven its reliability as natural gas supplier."

The assurances on gas wars highlight Russia's record of using Gazprom to settle political disputes with neighbours.

In 2009 it cut off gas to Ukraine in a price war designed to undermine its Russia-hostile leaders, causing blackouts in EU countries, such as Bulgaria, which depend on gas transit through Ukraine.

In contrast to Peskov's line, commission President Jose Manuel Barroso at the time described Russia as a banana republic.

"I've been involved in mediation processes since I was young, including in African matters. It's the first time I saw agreements that were systematically not respected ... Gas coming from Russia is not secure," he said.

The commission probe, which could end in a 10 percent fine of Gazprom's income in eight EU countries, saw its shares drop by almost 2 percent this week.

It is the latest in a line of blows to Russia's energy champion.

Gazprom last week said it has to stop development of the Shtokman gas field in the Barents Sea because it costs too much.

On Thursday, it said it has to refund European customers €1.9 billion for the first quarter of 2012 because of unduly high prices in long term contracts.

Its first quarter profits are down 24 percent year-on-year and its shares are trading at more than 60 percent less than in 2008 due to lower demand and global diversification into shale and liquid gas.

The Kremlin's use of the firm as a political instrument has also cost it dearly.

Gazprom lost billions in the gas war with Ukraine. Its investment in underwater pipelines - Nord Stream and South Stream - designed to maintain its Cold-War-era sphere of influence in eastern Europe overlooks cheaper land-based options. It also haemorrhages money on discounts aimed at keeping Belarus on side.

Meanwhile, amid Chizhov's gentle mockery of EU probes into "life on Mars," EU officials and diplomats are themselves indulging in a bit of schadenfreude.

One email doing the rounds in EU institutions makes fun of a tune by Vladimir Tumayev, the head of Gazprom subsidiary Spetsgazavtotrans.

"Let's drink to you. Let's drink to us. Let's drink to all the Russian gas ... That it never comes to an end," the cheesy song goes.

Signs of tension after EU move on Gazprom

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.

News in Brief

  1. MEPs urge better protection for journalists
  2. Dieselgate: MEPs back greater role for EU in car approvals
  3. European parliament adopts new organic farming rules
  4. EU granted protection to half million people in 2017
  5. Report: Facebook to carve 1.5bn users out of EU privacy law
  6. Greek court ruling permits migrants to travel to mainland
  7. Commonwealth summit hopes for trade boost after Brexit
  8. Merkel and Macron meet to finetune eurozone reform plans

Stakeholders' Highlights

  1. ILGA EuropeParabéNs! Portugal Votes to Respect the Rights of Trans and Intersex People
  2. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  3. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  4. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  5. UNICEFCalls for the Protection of Children in the Gaza Strip
  6. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  7. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight
  8. Macedonian Human Rights MovementMacedonians in Bulgaria Demand to End the Anti-Macedonian Name Negotiations
  9. Counter BalanceThe EIB Needs to Lead by Example on Tax Justice
  10. ILGA EuropeTrans People in Sweden to be Paid Compensation for Forced Sterilisation
  11. International Partnership for Human RightsThe Danger of Standing Up for Justice and Rights in Central Asia
  12. Mission of China to the EUChina and EU Must Work Together to Promote Global Steel Sector

Latest News

  1. Obscurity surrounds EU military fund's expert groups
  2. New EU party finance rules short circuit accountability
  3. Draghi to stay in secretive 'lobby' group
  4. Bulgaria offers lesson in tackling radical-right populists
  5. Getting secret EU trilogue documents: a case study
  6. Selmayr case scars Parliament and Commission
  7. Beyond macho: Turkish-EU ties
  8. 'Flobert' guns - Europe's latest terror loophole

Stakeholders' Highlights

  1. Swedish EnterprisesEU Tax Proposal on Digital Services Causes Concern for Small Exporting Economies
  2. Europea Jewish CongressCondemns the Horrific Murder of Holocaust Survivor Mireille Knoll in Paris
  3. Mission of China to the EUAn Open China Will Foster a World-Class Business Environment
  4. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  5. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  6. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  7. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  8. Martens CentreEuropean Defence Union: Time to Aim High?
  9. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  10. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  11. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights
  12. ACCAAppropriate Risk Management is Crucial for Effective Strategic Leadership