European Union and Gazprom on the way to agreement

The European Commission and the Russian giant Gazprom have moved closer to striking a deal over the company’s competitive behaviour in the European Union (EU), writes Diana Yordanova in Brussels. On 13 March 2017 the EU Competition Commissioner Margrethe Vestager invited all interested parties to comment on Gazprom commitments to address concerns that the company is breaking EU anti-trust rules. The comments were to cover Gazprom sales and commercial activity in eight EU countries – Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Hungary and Slovakia.

After the Commission sent a Statement of Objections to Gazprom in April 2015, the Russian energy company tabled promises to avoid anti-competitive actions just before Christmas 2016.

One of the key promises is to remove all provisions in contracts with customers that prohibit them from re-selling gas across EU borders. Furthermore, Gazprom has said it may help EU countries, such as Bulgaria and the Baltic states, which lack access to cross-border interconnections, offering to further integrate these states into international gas networks and deliver gas for fixed and transparent fees.

Gazprom has also promised to link prices to ‘competitive benchmarks’ such as liquid hub prices. In addition, it has stressed that price rates could be negotiated. Finally, Gazprom has promised not to take advantage of its dominant market position on the gas supply market to obtain rights relating to infrastructure.

‘We think that they provide a forward-looking solution to fix the issue’, said the Danish Commissioner, adding that the commitments can help ‘to better integrate the market and will enable the free flow of gas in central and eastern Europe at competitive prices’.

Gas distributors and users will have seven weeks (until 4 May 2017) to submit their comments. If support is secured, Gazprom’s promises will become legally binding. If it breaches them, the Commission could fine the Russian gas supplier 10% of its annual turnover without having to stage a new competition investigation.

Photo: EU Competition Commissioner Margrethe Vestager, in Brussels, announcing consultation on Gazprom’s promises to follow EU competition rules when trading gas in central and eastern Europe
Source:  European Commission