Tuesday

27th Jun 2017

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."

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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.

EU approves rescue of Italian banks

The European Commission gave the green light to a €17-billion plan by the Italian government to save Banca Popolare di Vicenza and Veneto Banca.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Italy reaches EU deal on failing bank

After months of negotiations, the European Commission and Italy agreed on the terms of rescue for Monte dei Paschi di Siena bank, including job cuts, salary caps and private sector involvement in the bailout.

Stakeholders' Highlights

  1. International Partnership for Human RightsEU-Kyrgyzstan Human Rights Talks Should Insist on Ending Reprisals Against Critical Voices
  2. European Free AllianceEFA Is Looking for a New Intern
  3. Malta EU 2017Conservation of Atlantic Tunas: International Measures Become EU Law
  4. European Healthy Lifestyle AllianceCan Statin Therapy Interfere With a Physically Active Lifestyle?
  5. EPSUOn Public Services Day, Stop Austerity! Workers Need a Pay Rise!
  6. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  7. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  8. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  9. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  10. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  11. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  12. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million

Latest News

  1. 'USB condoms' and migration on Estonia's EU agenda
  2. EU parliament should befriend transparency
  3. EU fines Google €2.4 bn over online shopping
  4. EU Commission could get say on Russia gas pipeline
  5. G20 is 'test run' for Trump-era climate governance
  6. Political conditions for EU funds prompt debate
  7. May defends proposal on EU citizens' rights
  8. UK visitors to pay into EU budget after Brexit