Monday

27th May 2019

EU documents lay bare Russian energy abuse

  • "Politically driven pricing ... is focal point of Gazprom corporate strategy" (Photo: Mitya Aleshkovsky)

Russian firm Gazprom has been strangling EU energy markets for years, documents show, as the European Commission takes aim at its new pipeline, Nord Stream 2.

The Russian firm's "abusive practices" were highlighted in internal commission documents, which came to light on Tuesday (10 April), pertaining to a seven-year old anti-trust dispute.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Vestager to decide anti-trust case in next few weeks (Photo: ec.europa.eu)

The papers included a 272-page Statement of Objections, dated 2015, four years after EU officials raided some 20 Gazprom offices in European cities in 2011, seizing more than 150,000 of the firm's files.

They also included a five-page annex entitled Preliminary Assessment of the Commitments Proposed by Gazprom.

The objections document said the Russian firm had hindered cross-border sales of gas in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, and Slovakia.

It said the "purpose was to segment the internal market along national borders" so that Gazprom could impose "unfair pricing" in the region.

It also said the Russian company had "leveraged its dominance by conditioning gas supplies … on obtaining certain non-related commitments" from clients, for instance by forcing Poland to yield control over the Yamal gas pipeline in northern Europe.

The annex detailed how Gazprom used destination clauses, re-export bans, restrictions on metering stations, and refusals to change delivery points to "segment" the EU states.

It said Denmark, Finland, Italy, and the Netherlands had also suffered from "significantly" excessive prices, but said the commission had decided to exclude this from its anti-trust proceeding.

"Unfair and politically driven pricing (linked to the Russian Federation's policy in CEE) is the focal point of Gazprom corporate strategy," the commission annex said, referring to Central and Eastern Europe.

Vestager decision

The old rap-sheet came out as EU anti-trust chief Margrethe Vestager prepares to decide, in April or May, whether to settle with Gazprom in light of subsequent pledges to mend its ways, or whether to impose fines, which could amount to billions of euros.

It also came out amid efforts by Vestager's colleague, energy commissioner Maros Sefcovic, to make sure that a new Gazprom pipeline to Germany, Nord Stream 2, does not lead to further Russian abuse.

The expose of Gazprom's past sins added to political pressure for Vestager to take a hard line.

"Instead of sanctions … amicable settlement Gazprom-EC?", Jacek Saryusz-Wolski, a Polish MEP, tweeted in response to the documents on Wednesday.

"Heavy charges in contrast with indulgent reaction, naive belief in RU [Russia's] doubtful commitments, in total separation from Nord Stream 2 & RU aggression," he added, making the point that Vestager should have addressed the issues of the new pipeline and of Russia's aggression in Ukraine, which began in 2014, in her deliberations.

Nord Stream 2

Meanwhile, Nord Stream 2 is to concentrate 70 percent of Russian gas sales to the EU on the German route if it is built as planned in the Baltic Sea in 2019.

Critics fear this will help Gazprom to halt transit via Ukraine and to cut off CEE states for political reasons, as well as to maintain the "segmentation" of EU markets for the sake of higher prices.

Sefcovic, in a statement on Wednesday, welcomed remarks by German chancellor Angela Merkel, who said on Tuesday that Nord Stream 2's "political" and "strategic" aspects ought to be given more thought.

"I very much appreciate active involvement of Germany, and notably chancellor Angela Merkel, in finding a solution that would safeguard Ukraine's role of a gas transit country," Sefcovic said.

He also spoke to Russian energy minister Alexander Novak by phone, who assured him that there would be "uninterrupted supplies of natural gas to Europe via transit through Ukraine after 2019".

Novak's promise comes after Gazprom chief Alexei Miller, who is now on a US sanctions list, made the same commitment on Tuesday.

Russian promises

An EU source told EUobserver that Russia's promises were not being taken at face value, however.

"The commission remains of the view that Nord Stream 2 … does not enhance our energy security", the source said.

The EU contact added that Novak and Miller's pledges to keep gas flowing though Ukraine did not add up.

"If the Ukrainian transit route is maintained, the legitimate question is whether Nord Stream 2 is needed and at what capacity. Our estimates show that with all existing and prospective import capacity, the EU would see a capacity of 900 bcm [billion cubic metres of gas a year], while our needs stand at approximately 400 bcm," the source said.

With Germany and Russia alone having the legal prerogative to decide on Nord Stream 2, the EU source added: "At the same time, we cannot change the cards we are dealt because a lot depends on national governments".

Merkel: Nord Stream 2 is 'political'

Germany has for the first time acknowledged concerns on the "political" and "strategic" aspects of Russia's Nord Stream 2 gas pipeline.

US yet to push on Nord Stream 2 sanctions

Washington would still like to block a planned gas pipeline between Russia and Germany but is not yet considering hitting companies involved in the project.

Analysis

Is Germany more hawkish on Russia?

Germany's socialist foreign minister just said the EU should "step up pressure" on Russia. Merkel aired "political" doubts on a Russian pipeline.

Analysis

EU should stop an insane US-Iran war

"If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!", US president Donald Trump tweeted on Monday (20 May).

News in Brief

  1. Russia-critical banker elected president of Lithuania
  2. Timmermans calls for 'progressive alliance'
  3. Catalonia's Puigdemont wins MEP seat
  4. Weber opens door to alliance with greens and liberals
  5. Tsipras calls snap Greek election after EP defeat
  6. Polish ruling party PiS takes lion's share of EU vote
  7. Romanian voters punish ruling PSD party
  8. First official EP projection: EPP remain top, Greens fourth

Analysis

EU should stop an insane US-Iran war

"If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!", US president Donald Trump tweeted on Monday (20 May).

Stakeholders' Highlights

  1. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  2. Nordic Council of MinistersEducation gets refugees into work
  3. Counter BalanceSign the petition to help reform the EU’s Bank
  4. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  5. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  6. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  7. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  8. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  9. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  10. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  11. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  12. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic commitment to driving global gender equality
  2. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  3. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  4. Nordic Council of MinistersNordic talks on parental leave at the UN
  5. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  6. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  7. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  8. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  9. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  10. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  11. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  12. Nordic Council of MinistersNordic ministers take the lead in combatting climate change

Join EUobserver

Support quality EU news

Join us