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After a year-long investigation into Gazprom, the Russian natural gas giant which monopolises the supply of natural gas to central and eastern Europe, the European Union’s Competition Commissioner Joaquin Almunia, has announced that they are preparing to charge the company with abusing its dominant position in the region.
Companies that are deemed to have broken the EU’s antitrust laws can be fined up to 10 percent of their annual revenues. Last year Gazprom earned $148 billion, putting in danger of receiving a $15 billion fine.
The application of these charges against Gazprom is likely to only increase tensions between the Russian company and the EU, which have been high due to accusations that the continent is unfairly trying to boost competition in the natural gas market, and reduce its reliance on Russia.
Tensions are also high due to the EU’s desire to build closer ties to the Eastern Bloc, and use these countries as transit routes to import natural gas from alternative sources in central Asia. Moscow has already threatened to raise Ukraine’s gas prices or limit the amount of gas delivered to the country if it decides to sign a free-trade agreement with the EU in November.
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The EU antitrust regulator believes that Gazprom has hindered the free flow of natural gas across the continent, and has imposed unfair prices on its customers as it lined gas prices to oil prices, which have been at record highs for some time.
Almunia, speaking at an event organised by the Lithuanian Competition Authority, said that “it would be premature to anticipate when the next steps would be taken in this investigation, but we have now moved to the phase of preparing a statement of objections (a sheet of charges to be brought against the company)”
When asked when the charges would be brought against Gazprom, Almunia replied that “we never pre-commit to deadlines,” but a source close to the matter told Reuters that the Commission hoped to take action before the end of the year.
Gazprom may try to avoid the fine by offering discounts to customers, and making compromises in other areas. After previous EU investigations, Gazprom already agreed to remove a clause from its contracts, that prevented energy companies from reselling gas that they had bought from Gazprom.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com