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Europe offers Gazprom to agree amicably

September 10, 2012, 16:22 UTC+3

According to a representative of the European Parliament

1 pages in this article

The European Union made it clear that Russia’s gas giant Gazprom may avoid penal sanctions within the framework of the antimonopoly investigation launched last week. According to a representative of the European Parliament, all discrepancies can be settled through negotiations. Experts believe that Gazprom and Russian consumers can win as a result.

Gazprom most probably will not be fined within the framework of the European Commission’s antimonopoly investigation, a member of the European Parliament’s Committee on Industry, Research and Energy, Bela Kovacs, was quoted by RBC daily as saying. “The threat of fine exists, but I do not think that it will be imposed. This is my personal opinion,” he said.

Last week the European Commission started an investigation of Gazprom’s suspected anti-competitive practices in Central and Eastern Europe. In particular, the Russian gas monopoly is suspected of hampering the creation of a common gas market in EU member-states and diversification policy on gas supplies and of setting unfair prices for their clients linking them with the oil price. If Europe manages to prove Gazprom’s guilt, the gas giant may face a fine of up to 6 billion dollars.

Gazprom insisted it observed all requirements for operation on the EU market. “We are engaged exclusively in economic activity and we do this in compliance with the rules of that country, where we work, even if we do not like these rules, for instance the Third Energy Package,” a member of management committee and the head of its department for relations with authorities, Vladimir Markov, told reporters. He also noted that Gazprom’s share on the European market made up less than one third and it could not be considered a monopoly.

President Vladimir Putin also took the gas giant’s side. He emphasized that the gas price formation principles were developed long ago; they were fixed in the long-term contracts and were not contested. The Russian leader noted he regretted the European Commission’s actions against Gazprom, but did not consider them “a trade war.”

Forced change of the price formula in gas contracts may increase competitiveness of the Russian gas on the European market and ensure the growth of exports in the long-term, the president of East European Gas Analysis, Mikhail Korchemkin, wrote in his LiveJournal blog. The European Commission is unlikely to fine Gazprom and most probably the Russian monopoly will take obligations to create conditions for free competition, i.e. it will allow swap operations and virtual reverse. The expert believes that Gazprom will only benefit from this.

Meanwhile, the International Energy Agency forecasts that already during the next decade Russia may finally lose its status of a leader on the global gas market, the Novye Izvestiya reported. This will happen, if China and some other states follow suit, after the United States started large-scale gas development from non-traditional sources.

“Following the losses on the external market, an idea of creating an equal income market – equalization of the prices for Russian and European consumers - nearly emerged in Gazprom,” said Grigory Birg from Investcafe. “However, in practice this may take years, as now the price gap is too wide. For instance, if we supply gas to Europe at a price of 400 dollars per 1,000 cubic meters, Russian consumers get it for 100 dollars on the average. If to equalize these tariffs sharply, this step will spark social explosion, although the gas prices for Russian consumers grow by 15 percent every year.”



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