Monday

20th Nov 2017

EU and Gazprom closer to amicable deal

  • Vestager: "This is not the end of the story. But it is a promising moment" (Photo: European Commission)

The European Commission took a new step on Monday (13 March) towards closing its antitrust case against Russia's Gazprom.

EU competition commissioner Margrete Vestager said that the state-owned gas company has provided "a forward looking solution to fix the issues" raised by the EU executive over its market policies in central and eastern Europe.

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.

  • "Gazprom is welcome to sell gas in Europe but it has to follow EU rules, including our competition rules," Vestager said. (Photo: qwertyuiop)

Gazprom has committed to removing restrictions on cross-border resales of gas; to guaranteeing market prices in the region; and to not using its market position to impose conditions on gas infrastructure operators.

The commission invited "all interested parties", mainly states and gas companies, to send in their comments on Gazprom's commitments before 4 May.

The commitments will be legally binding if they agree with the commission that the Russian company's promises are enough to ensure a free flow of gas into central and eastern Europe at a normal price.

Gazprom would then risk a fine of up to 10 percent of its global turnover if it did not respect its commitments.

"Gazprom is welcome to sell gas in Europe but it has to follow EU rules, including our competition rules," Vestager mentioned at a press conference in Brussels.

Vestager opened the antitrust case against Gazprom in April 2015, after an investigation that was launched in 2012, under the previous EU commission.

She said at the time that she considered Gazprom to be "abusing its dominant position" in eight EU countries - Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.

These countries, all former parts of Soviet-bloc, are still heavily dependent on Russian gas for geographical as well as historical reasons, despite having diversified supplies in recent years.

After a meeting with Gazprom's deputy chairman Alexander Medvedev and Russian deputy energy minister Anatoly Yanovsky last October, Vestager said that she was waiting for the company to come up with solutions.

Gazprom sent its proposals after Christmas and took some fine tuning before the commission decided that the company's commitments could address concerns over its potential abuse of power.

Despite the fraught climate between Russia and the EU, the commissioner insisted that the case was treated at a legal level only, brushing aside questions as to whether she was trying to accommodate Russia politically.

Keeping clear of politics

"You have to keep law enforcement clear of politics," she insisted, adding that she would lose her "legitimacy" if she failed to do so.

She added that, although Russian government officials took part in EU-Gazprom talks, the procedure was "normal" and "very straight-forward".

She went on to say that her responsibility was to "find how we can solve this case" and "make the marker work, no matter the flag, no matter the ownership, no matter the size of the company".

Vestager also defended her decision not to fine Gazprom for past abuses of its strong position and focused on a possible future change of approach by the Russian company.

She remarked that the risk of a so-called prohibition procedure to impose a fine was that "you go to court, it can take ages and there is no certainty that you'll change the behaviour" of the firm.

She insisted that asking for commitments that will become legally binding was a "strong incentive to change your behaviour".

The political question could be raised again later in the procedure if consulted states or companies say that Gazprom's commitments are not enough, or if they raise new issues.

Three commitments

Vestager said that if comments sent to the commission "show that [Gazprom's] commitments are not suitable, then of course we will not accept them".

But the commission will have no deadline to take its decision and no defined criteria over whether negative comments would be admissible or not.

Gazprom's commitments are of three distinct kinds: enabling the free flow of gas in central and eastern Europe, ensuring competitive gas prices in the region, and removing demands obtained through its dominant market position.

To address the first issue, the company has pledged to remove clauses in contracts that prevent or discourage (through higher costs) customers in Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Hungary and Slovakia from re-selling Gazprom gas in other countries.

It also agreed to facilitate the Baltic States and Bulgaria's interconnections with other countries.

On the second issue, Gazprom stated that it will link its prices in Bulgaria, Estonia, Latvia, Lithuania and Poland to "competitive benchmarks" - by using comparisons with market prices in other countries, including in Western Europe. It also committed to do "more frequent and efficient price reviews".

To address the third concern, Gazprom agreed not to seek damages from Bulgaria over the cancellation of the South Stream pipeline project.

"This is not the end of the story. But it is a promising moment," Vestager noted.

Nord Stream 2

On another controversial issue between Gazprom and the EU, the Nord Stream 2 pipeline project, the commissioner argued that the EU executive did "not see a need for a new infrastructure of the magnitude of Nord Stream 2".

She added that the commission did not consider the planned pipeline, which would span from Russia to Germany through the Baltic sea, as "a project of common interest".

She said however that legal concerns raised by the project were still being analysed and that what the commission would do on that front was "still open".

At an EU summit last week, Denmark and Poland, two countries which are opposed to the project, asked the commission to tell them quickly whether the project respects EU rules.

Column / Crude World

Nordstream 2: Alternative pipeline facts

Arguments put forward by Nord Stream 2's Brussels lobbyist in defence of the Russian-led project are not consistent and ignore some basic facts.

Letter

Nord Stream 2 sets record straight

The choice of Nord Stream 2's logistics hub in Sweden was driven by the award-winning green logistics concept of the first Nord Stream project, and not by any political motivations.

Commission stops German-British stock merger

The decision to block the merger of the London Stock Exchange and Deutsche Boerse was expected, as negotiations between the parties broke down a few weeks ago.

Opinion

Clean energy package needs market, not just targets

While discussions on targets and objectives are important, the focus must not be on the percentage, but rather on delivering fundamental market reforms in order to reach targets in place.

News in Brief

  1. European Banking Authority will move to Paris
  2. EU court threatens daily fine over Polish forest logging
  3. EU medicines agency will move to Milan or Amsterdam
  4. Amsterdam, Copenhagen, Milan in next round of EMA vote
  5. Three countries pull out of medicines agency Brexit race
  6. Schulz calls for new German elections
  7. EU Commission 'confident' on German stability
  8. EU adopts new border check rules

Stakeholders' Highlights

  1. Bio-Based IndustriesBio-Based Industries: European Growth is in Our Nature!
  2. Dialogue PlatformErdogan's Most Vulnerable Victims: Women and Children
  3. UNICEFEuropean Parliament Marks World Children's Day by Launching Dialogue With Children
  4. European Jewish CongressAntisemitism in Europe Today: Is It Still a Threat to Free and Open Society?
  5. Counter BalanceNew Report: Juncker Plan Backs Billions in Fossil Fuels and Carbon-Heavy Infrastructure
  6. Nordic Council of MinistersNordic countries prioritise fossil fuel subsidy reform
  7. Mission of China to the EUNew era for China brings new opportunities to all
  8. ACCASmall and Medium Sized Practices Must 'Offer the Whole Package'
  9. UNICEFAhead of the African Union - EU Summit, Survey Highlights Impact of Conflict on Education
  10. Nordic Council of MinistersNordic Council Calls for Closer Co-Operation on Foreign Policy
  11. Swedish EnterprisesTrilogue Negotiations - Striking the Balance Between Transparency and Efficiency
  12. Access EuropeProspects for US-EU Relations Under the Trump Administration - 28 November 2017

Stakeholders' Highlights

  1. Nordic Council of MinistersSustainable Growth the Nordic Way: Climate Solutions for a Sustainable Future
  2. EU2017EEHow Data Fuels Estonia's Economy
  3. Mission of China to the EUChina and EU Step Up Water Management Cooperation
  4. CECEMachinery Industry Calls for Joint EU Approach to Develop Digital Construction Sector
  5. Nordic Council of MinistersMale Business Leaders Gather in Copenhagen to Advance Gender Equality
  6. EnelNo ETS Deal Means It Can Still Be Strengthened
  7. EU2017EEEstonia Anticipates More Digital Cooperation With Sweden
  8. Mission of China to the EUChina Launches Campaign to Protect IPR of Foreign Companies
  9. European Jewish CongressEJC Condemns Attacks on Ruta Vanagaite and the Shredding of Her Books in Lithuania
  10. Bio-Based IndustriesDiscover the Future of the Bio-Based Economy. Register Now for the BBI Stakeholder Forum!
  11. European Free AllianceWelcome Catalonia!
  12. UNICEFGrowing Number of Unaccompanied Refugee Children in Greece in Need of Shelter