EU raids Gazprom offices in anti-trust probe

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Russian gas exporter Gazprom said it would cooperate with an EU competition probe of its units, while sources on both sides said yesterday (28 September) the real source of tension was Europe's fear of its growing reliance on Russian gas.

A European Commission official said raids on the units this week were part of efforts to cut dependence on Russian gas, and Gazprom sources suggested the EU was acting out of worry over progress on Russia's pipeline projects that would increase Moscow's share of European energy markets.

Officials from the EU executive launched the raids in central and eastern European states to investigate firms involved in the supply, transmission and storage of natural gas. The Commission has said the raids were linked to suspicions about anti-competitive practices.

A Commission official, who declined to be named, told Reuters the raids were part of the EU's efforts to wean itself off reliance on Russian gas and concerns about Gazprom's power as a state-controlled entity.

"The Commission has been much concerned about Gazprom for quite a while. There have been a number of informal discussions between the Commission with EU governments and companies about Gazprom," said the official.

Gazprom is Russia's biggest company and the world's largest gas producer. President Dmitry Medvedev is a former chairman, and some critics have accused Prime Minister Vladimir Putin of using energy exports as a lever in geopolitical manoeuvering.

South Stream targeted?

Gazprom sources suggested the probe was linked to progress on its South Stream pipeline project, a rival to the EU-backed Nabucco link that would bring Caspian region to Europe while bypassing Russia.

"My guess is that it comes as Russia is speeding up its projects, including the South Stream underwater link," one Gazprom source said.

The raids were carried out as rivalry between Russia and the EU over Caspian hydrocarbon resources heats up and a pricing row with Ukraine, a transit country for Russian gas supplies to Europe, persists.

Gazprom, Russia's largest company with capitalisation of $113 billion (83 billion euro), is looking to increase its gas supplies to Europe this year by 12% to 155 billion cubic metres. It also eyeing a 30% share of the European gas market, up from around 25% now, in coming years.

In a statement published on Wednesday the company said that the Commission had not informed it of any claims and the raids did not amount to accusations it had broken competition law. Gazprom added that it was ready to fully cooperate over the probe with the EU authorities.

The raids were carried out in Gazprom's subsidiaries including Gazprom Germania and the Czech Republic's Vemex, which earlier this month bought a controlling stake in Czech energy retailer RSP Energy.

A Commission spokeswoman said regulators had just begun their investigation and had not yet drawn any conclusions.

"We're at the beginning of the investigation, we have our suspicions and we have to see whether these are confirmed on the basis of the evidence we find and our analysis," spokeswoman Amelia Torres told a daily news briefing in Brussels.

Third energy package

The EU is working on implementation of the so-called Third Energy Package, which imposes limits on the ownership of EU pipeline infrastructure by gas suppliers and calls for the "unbundling" of over-concentrated ownership.

Under the rules, Russia could be forced to sell off parts of its pipeline network in the EU, which has sought to liberalise the gas and power markets in recent years.

Wielding its antitrust tools and the threat of fines up to 10% of a company's global turnover, the EU executive has in recent years forced E.ON, RWE and ENI to open up or sell their pipelines to rivals. E.ON and GDF had also to dismantle their market-sharing deals.

A group of experts from European regulators is expected to meet Russian colleagues in Moscow on 6-7 October to discuss the package among other issues.

Vladimir Feigin, president of the Energy and Finance Institute in Moscow and a member of the Russian delegation, said the European Commission was taking a "dangerous path" with the raids.

"It's not a simple demonstration of muscles … There are lots of issues, which are highly politicised, including Gazprom's long-term contracts," he said.

These contracts have been the subject of heated debates with the Russian company's clients, including Germany's E.ON, which call for a spot price mechanism as a way to obtain cheaper gas.

Gazprom sources told Reuters that it may take years for the European Union's competition authority to analyse the results of its raids and draw any conclusions.

EURACTIV with Reuters

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