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EU, Gazprom Move Closer To Resolving Gas Sales Dispute

Gazprom

Signaling a thaw in relations, the European Commission (EC) said on Monday that Gazprom had offered commitments to address the EU’s competition concerns regarding the Russian gas giant’s dominating gas markets in Central and Eastern Europe, and potentially abusing its dominant position in pricing.

Last October, Gazprom said it was about to offer concessions to the EU in order to avoid what was suspected might be billions of dollars in fines over the five-year-old gas pricing dispute. The conflict began back in 2011 when EU antitrust regulators began investigating Gazprom for anticompetitive behavior, citing Gazprom’s practice of pricing natural gas differently to different countries depending on how compliant they were to Moscow.

The EC had expressed in April 2015 its preliminary view that Gazprom had been breaching EU antitrust regulation by pursuing an overall strategy to partition Central and Eastern European gas markets, for example by reducing the customers’ ability to resell the gas, possibly charging unfair prices in certain EU member states, and potentially abusing its dominant market position by making the supply of gas dependent on unrelated commitments from wholesalers concerning gas transport infrastructure.

Now, Gazprom is offering to remove restrictions on reselling gas cross-border once and for all; ensure that prices in Central and Eastern Europe reflect competitive price benchmarks; and not use any advantages regarding gas infrastructure that it had obtained because of its dominant position. The countries concerned are Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Hungary, and Slovakia.

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“In the Commission’s view, the commitments offered by Gazprom cover its competition concerns. They help to better integrate Central and Eastern European gas markets, facilitating cross-border gas flows at competitive prices,” the EC said in its statement.

The commitments “address our competition concerns and provide a forward-looking solution in line with EU rules. In fact, they help to better integrate gas markets in the region,” EU Commissioner in charge of competition policy, Margrethe Vestager, said.

All interested parties have seven weeks to comment on Gazprom’s commitments, and after that the EC will adopt a final view on the issue. If it deems the commitments to be satisfactory, it may adopt a decision that would make the commitments legally binding on Gazprom. However, “if a company breaks such commitments, the Commission can impose a fine of up to 10% of the company’s worldwide turnover, without having to prove an infringement of the EU antitrust rules,” it noted.

By Tsvetana Paraskova for Oilprice.com

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