Ukraine’s Naftogaz complains to EU over Gazprom’s abuse of dominant position

A worker turns a tap at the gas-compressor station in Mryn village, about 130 km of Kyiv, Ukraine, in a 2015 file photo. [Roman Pilpey/EPA]

The Ukrainian state gas company Naftogaz filed on Wednesday (22 December) a competition law complaint with the European Commission against Russia’s Gazprom for “abusing its dominant position” on the European gas market, calling on EU authorities to take immediate measures to normalise the situation.

“Gazprom sharply reduced its delivery of natural gas to the European spot market, despite growing market demand, and prevents other companies from supplying additional gas to Europe and competing with Gazprom,” Naftogaz CEO Yuriy Vitrenko said.

“This is one of the key causes of the crisis contributing to record-high gas prices in Europe. Gazprom’s actions are anti-competitive and have significant negative consequences for all European consumers. Naftogaz, as a major gas purchaser on the European gas market, has suffered losses due to these abuses. Naftogaz, therefore, requests the European Commission to respond appropriately to these violations.”

In its complaint, Naftogaz highlighted a number of specific abuses.

Namely, this has to do with Gazprom’s “deliberate refusal” to properly refill gas storage facilities in the EU, which are owned by Gazprom or in which it has booked significant long-term capacities. In addition, the Russian company stopped selling gas through its own Electronic Sales Platform, abruptly and without providing justification, Naftogaz claims.

European gas prices hit a new record high on Tuesday ($1921 per 1,000 cubic meters). Some western politicians and industry experts have accused Russia of withholding gas deliveries to Europe amid political tensions over Ukraine, as well as delays in the certification of the Nord Stream 2 pipeline.

Russia has denied any connection.

“Europe has very little storage buffer this winter and Europe’s balance is therefore a lot more dependent on imports than in previous years,” said James Waddell, head of European gas at Energy Aspects, as quoted by Reuters.

According to Naftogaz, despite having sufficient gas volumes and the ability to use the free transit capacity of Ukraine’s Gas Transmission System Operator, Gazprom refused to deliver gas from Russia to Europe.

The Ukrainian gas company further said that Gazprom also failed to add a gas transmission point on its electronic platform in order to receive gas at the Ukraine-Russia border and that Gazprom continues to block gas export by independent Russian gas producers and flows from Central Asia to Europe.

According to Naftogaz, the goal of such action is to create an artificial deficit of gas to pressure the EU into securing the rapid commissioning of the Nord Stream 2 pipeline without complying with European rules.

Naftogaz CEO: Certifying only the Nord Stream 2 last mile is ‘a mockery of EU rules’

The Ukrainian position is that since Nord Stream 2 is not compliant with EU rules, it should not be certified, the CEO of Ukraine’s gas and oil state company Naftogaz Yuriy Vitrenko told a conference in Brussels.

Naftogaz called on the European Commission to immediately order Gazprom to release significant gas volumes for sale on its Electronic Sales Platform on the Ukrainian-Russian border, or at least on the border of Ukraine and EU member states.

The latest gas price rally came after flows through the Yamal-Europe pipeline via Belarus and Poland, one of the three routes that Russia’s state-owned Gazprom uses to supply natural gas to north-west Europe, stopped as temperatures plunged in Moscow and Gazprom decided not to book export capacity.

Gazprom books fraction of gas transit capacity via Poland, ignores Ukraine

Russian gas giant Gazprom has booked about a third of offered additional gas transit capacity via the Yamal-Europe pipeline via Poland for November and has not booked any volumes via Ukraine, auction results showed on Monday (18 October).

Some traders quoted by the Financial Time voiced fear that a possible Russian invasion of Ukraine could disrupt supplies even further over the winter.

[Edited by Zoran Radosavljevic]

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