Tuesday

23rd Jan 2018

Gazprom threats are aimed at EU anti-trust case, diplomats say

  • 'When you are a monopolist ... you can always find illegal ways to harass dependent countries' (Photo: gazprom.com)

EU diplomats say Gazprom’s recent threats on security of supply to Europe are an attempt to put pressure on the European Commission over anti-trust proceedings.

The commission will, on Wednesday (22 April), send a statement of objections to the Russian gas firm, according to EU sources familiar with the matter.

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The indictment stems from a Lithuanian complaint in 2011 that the gas monopoly is abusing its dominant market position in eastern Europe.

It prompted raids by EU officials of Gazprom offices around the EU, who seized bushels of internal documents.

It also prompted Russia’s Vladimir Putin at the time to say he “will follow what is going on around Gazprom in the most attentive way”.

The case went quiet under the previous EU anti-trust commissioner, Spain’s Joaquin Almunia, prompting speculation the EU had frozen proceedings in order not to complicate EU-Russia relations in the context of the Ukraine crisis.

But Almunia’s successor, Denmark’s Margrethe Vestager, earlier this month signaled she is not afraid to challenge corporate giants by unveiling a similar indictment against US Internet company Google.

For his part, one senior EU diplomat told EUobserver on Tuesday: “Russia has been pondering this issue [the EU competition case] for some time and I think, to an extent, all these threats to cut supplies via Ukraine from 2019 and to build Turkish Stream instead are an allergic reaction linked to the case”.

A second EU source said there is a risk Gazprom could also cut supplies to vulnerable member states, such as the Baltic countries, in order to increase leverage against Brussels.

“It’s always an option: When you are a monopolist and when you are abusing the rules, you can always find illegal ways to harass dependent countries”.

“I understand the peculiarity of the situation [on Ukraine] - but there’s never a ‘good moment’ for this kind of action”, the source noted.

The source added the Google precedent can be used by EU officials to show that EU law is being applied in a non-political way, however.

“The complaints against Gazprom came more than a year before the Ukraine crisis. If we can proceed against Google, then we can also say that the Gazprom case is purely about energy and competition laws, not about Ukraine”.

Threats

Russia said last December it will no longer build "South Stream", a pipeline via Bulgaria which had to comply with EU anti-monopoly laws.

It said it will instead build a pipeline to Turkey and stop supplies to the EU via Ukraine in 2019 when the Turkish project is operational.

"Turkish Stream" is to terminate on the Greek-Russian border, meaning it doesn’t have to follow EU energy legislation, which isn't enforced in Turkey despite its EU accession talks.

The Gazprom CEO, Alexei Miller, repeated the threats in Berlin last week, adding that Russia plans to sell more gas to the Far East in future.

He is due in Greece on Tuesday to discuss Athens’ potential participation in the Turkish project.

Vestager

But Vestager, in a speech in Washington last week, noted that she will act “decisively against energy companies that harm rivals, block energy flows from one EU country to another, or threaten to close the tap”.

She added in a speech in New York on Monday: “We all apply the same rules of the EU treaty. These rules have become the law of the land throughout the EU”.

“Up until the end of 2013, the commission investigated 122 cases and the national authorities 665. So, we can now talk of a genuine European system of competition control. The companies that are considering breaking the law should look at these figures and reconsider”.

Gazprom chief warns EU on higher gas prices

Gazprom chief Alexei Miller has said the EU's planned energy union will raise the cost of Russian gas and warned that his company will stop supplying gas through Ukraine in 2019.

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