• 7 hours Russia Approves Profit-Based Oil Tax For 2019
  • 11 hours French Strike Disrupts Exxon And Total’s Oil Product Shipments
  • 13 hours Kurdistan’s Oil Exports Still Below Pre-Conflict Levels
  • 15 hours Oil Production Cuts Taking A Toll On Russia’s Economy
  • 17 hours Aramco In Talks With Chinese Petrochemical Producers
  • 18 hours Federal Judge Grants Go-Ahead On Keystone XL Lawsuit
  • 20 hours Maduro Names Chavez’ Cousin As Citgo Boss
  • 1 day Bidding Action Heats Up In UK’s Continental Shelf
  • 1 day Keystone Pipeline Restart Still Unknown
  • 1 day UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 2 days Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 2 days Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 2 days German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 2 days Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 2 days Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 3 days Oil Prices Rise After API Reports Major Crude Draw
  • 3 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 3 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 3 days Statoil Looks To Lighter Oil To Boost Profitability
  • 3 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 3 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 3 days Whitefish Energy Suspends Work In Puerto Rico
  • 3 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 3 days Thanksgiving Gas Prices At 3-Year High
  • 3 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 4 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 4 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 4 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 4 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 4 days ConocoPhillips Sets Price Ceiling For New Projects
  • 6 days Shell Oil Trading Head Steps Down After 29 Years
  • 6 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 7 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 7 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 7 days Venezuela Officially In Default
  • 7 days Iran Prepares To Export LNG To Boost Trade Relations
  • 7 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 7 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 7 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 7 days Rosneft Announces Completion Of World’s Longest Well
Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

EU Could End Russian Gas Bullying In One Fell Swoop

EU Could End Russian Gas Bullying In One Fell Swoop

A regulator with the European Commission could alter Europe’s long-term energy security this week.

Europe’s competition commissioner is set to formally file charges against Russia’s Gazprom on April 22 for violating anti-trust laws. The case has been several years in the making, one that went on hold after Russia’s intervention in Ukraine last year.

The EU’s top anti-trust regulator Margrethe Vestager will charge Gazprom with limiting competition in Europe’s energy markets. One complaint is that in bilateral deals with several eastern European countries, Gazprom allegedly links natural gas prices with cooperation on other areas of political significance. If a certain country agrees to help Russia build a pipeline, for example, they may receive a lower price for natural gas than its neighbors. That violates European competition laws. Related: Who Is Saudi Arabia Really Targeting In Its Price War?

The EU also charges that Gazprom blocks the resale of natural gas. Moving natural gas around provides a vital lifeline for countries that need supplies at a moment’s notice – during a cold winter for example, or if Russia cuts off gas flows (as it has in the past). And in light of Russia’s annexation of Crimea in 2014, the EU has prioritized deeper pipeline interconnections to reduce the vulnerability of Eastern European states. For years Gazprom has sought to stymie gas resales around Europe, something the Commission says is illegal.

Still, it is not clear that there is a substantial alternative to Russian gas in the near-term. Baltic States like Lithuania have turned to imports of LNG, which have loosened Gazprom’s grip over their energy supplies. But Europe on the whole will still need Russian gas well into the next decade, according to an October 2014 study from the Oxford Institute of Energy Studies. The EU has 125 billion cubic meters of natural gas under contract from Gazprom through 2020, which is equivalent to nearly three-quarters of total imports from Gazprom in 2013. In other words, even if the EU found alternative sources of gas – through imported U.S. LNG for example – it will be difficult to shake off the large role that Gazprom plays in supplying Europe with energy. These contracts cannot easily be broken. Related: Wall Street Bets On Oil Price Rally

Vestager says that the case is one related to business and not politics, but bringing charges against Europe’s main supplier of gas will inevitably have political ramifications. Gazprom, and the Russian government, will no doubt be irked by the case, which could bleed over into the political standoff with Europe over Ukraine. Implementing the Minsk accord that called for a ceasefire between Ukraine and Russian-backed rebels has been difficult, to say the least. A case against Gazprom is not necessarily linked to Ukraine, but broader EU-Russian relations could be affected.

Another issue to watch is gas pricing. The EU has prioritized negotiating collectively with Gazprom over pricing to secure a single EU-wide gas price. That strikes at the heart of another complaint by antitrust regulators: that Gazprom links gas prices to the price of oil, and keeps prices artificially high. Until negotiations were frozen last year amid tension in Ukraine, European regulators had not made a lot of progress in changing Gazprom’s behavior on this issue. Gazprom has picked off countries one-by-one, signing bilateral deals at different prices. Gazprom’s CEO Aleksei Miller issued a veiled threat on April 13, suggesting it won’t fold easily on the issue of pricing. “If the European Commission will insist on equal prices,” Miller said, “then of course, as you understand, a base price is not the lowest price. It will be the highest price.” Related: Saudi Price War Strategy May Blow Up In Their Face

On the other hand, the case the EU Commission is bringing against Gazprom will provide the EU with more leverage. Vestager has authority to levy billion dollar fines against Gazprom. As a result, the Russian company has signaled that it would be willing to negotiate a settlement with the antitrust body. That could produce some wins for the EU, such as securing a commitment from Gazprom to end certain anti-competitive practices. Theoretically that could affect pricing or open up the door to new contracts for gas supplies.

For years, top EU officials in Brussels have promised to wean themselves off dependence on Russian energy, with little progress. While Russia will be an essential supplier of natural gas for the EU for many years to come, the anti-trust case set to be unveiled this week against Gazprom may finally provide some teeth to Europe’s push for greater energy security.

By Nick Cunningham of Oilprice.com

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment
  • Alex on April 21 2015 said:
    EU is looking for to diversify the gas supply. The Russian
    piped gas is the cheapest. If EU reduces the Russian gas
    supply it would buy much more expensive US LNG.
    I wonder if normal European citizen (not Brussels politician!)
    would be happy to pay more money for energy?!
    Brussel and Washington every time are talking about "Russian Agression"
    and using the gas like the "weapon". I would ask who does have
    the huge amount military bases abrod. And who did use the bombs
    and drones to "export democracy values"? Is it Russia? No! It is
    United States!

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News