Energy Security in Focus: EU & Gazprom Set to Solve a Long-Standing Dispute

Written by | Thursday, April 5th, 2018
@Eubulletin

The European Union and Gazprom are about to find a solution to a long-running antitrust dispute after the Russian company agreed to implement pricing reforms and to allow competitors enter the Eastern European market. A decision by the European Commission could come in the upcoming days, although the timings could still slip. A solution would allow Gazprom to avoid a potential fine of up to 10 percent of its worldwide turnover.

The seven-year-old case points to the ever more complicated relationship between Europe and Russia, which is currently being strained by Ukraine, Syria and, most recently, the poisoning of an ex-Russian spy in Salisbury, England, which led to the biggest expulsion of Russian diplomats since the Cold War. In 2017, Russia’s energy giant Gazprom, which supplies a third of the European gas, proposed to connect prices to benchmarks such as Western European gas market hubs and border prices in Western Europe, and allow price revisions every two years. This was meant to address the complaints around excessive pricing in Bulgaria, Estonia, Latvia, Lithuania and Poland vis-à-vis German prices due to Gazprom’s policy of locking clients into established oil-indexed deals.

Gazprom also promised to scrap all contractual restrictions, which prevent clients from reselling its gas and let the Bulgarian transmission network operator take over the management of Bulgaria’s gas flows to Greece. The Russian company is also about to drop $70 million claim for damages caused by the 2014 cancellation of the South Stream gas pipeline project that was supposed to transfer Russian gas to Central Europe via the Black Sea. Gazprom has revisited its original proposal on concessions after negative feedback from the EU and its European customers. Revisions have been mostly made to the technical aspects of its commercial dealings such as lower service fees.

 

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