Brussels key to breaking Gazprom’s monopolistic practices

VILNIUS - Lithuanian Prime Minister Andrius Kubilius has emphasized at a press conference on Sept. 14 that EU gas suppliers must act in accordance with transparent competition rules, reports ELTA. “We support European Commission efforts to see that all major gas suppliers, including Gazprom, abide by fair and transparent competition rules applicable across the EU,” said the PM.

EU Energy Commissioner Gunther Oettinger has also noted that gas prices should be the same in all the EU countries, and Russian gas suppliers should accept the European competition rules. “But the thing is fair conditions. We should avoid different prices for gas. Gas is gas, but its price in Berlin or Paris is much lower than that in Vilnius,” said the EU Energy Commissioner at the conference Baltic Energy Market Interconnection Plan (BEMIT): Towards Integrated and Sustainable Energy in the Region last Friday.

Kubilius added that the most important concern of the government is to achieve that gas supply negotiations in Lithuania would have similar conditions as those enjoyed by other EU countries that are not in total dependence on Gazprom’s supply. “I am confident that our concerted efforts will lead us to one of the major goals for the Baltic region, when energy independence becomes a reality, providing our energy consumers with the same conditions enjoyed by energy consumers in Europe,” said the prime minister.

He concluded the press conference by expressing his appreciation to the EU Energy Commissioner and the European Commission for the achievements in the development of a common European energy strategy.
Level playing field

Kubilius also noted that Russia and Norway are supplying a similar amount of gas to the European Union market, but that Norway does not complain about the EU requirements. “The numbers are very similar and I have never heard that the Norwegian prime minister or Norwegian companies would complain about the EU rules, the third package or requirements of the competitive pricing policy in supplying gas to Europe,” said Kubilius.
“I believe that both Gazprom and Russia will understand what the EU rules are and will follow these rules, as any other participant in the EU market,” said the prime minister.

The head of state pointed out that Gazprom supplies the EU with 140 billion cubic meters of gas annually, but this year the amount decreased by 10 percent. Meanwhile, Norway supplies 110 billion cubic meters of gas.
Oettinger said that each prime minister and president has a duty to protect state-owned companies, but Russian leader Vladimir Putin should understand that the energy giant Gazprom has to play by “our rules.” The energy commissioner says that there is nothing exceptional, because not only Russia, but all players in the EU market must follow the same standards.

“Everyone recognizes our rules, the suppliers from Algeria, Norway, and Qatar,” says Oettinger.
On Sept. 4, the European Commission launched an official antitrust investigation on Gazprom regarding three allegedly anti-competitive practices in Central and Eastern Europe. It expressed its concern about a possible abuse of Gazprom’s dominant market position by restricting the free flow of gas across member states, preventing diversification of supply, and pricing gas unfairly by linking gas prices to oil prices. The investigation centers on Gazprom’s use of long-term contracts to lock in prices that are tied to that of oil - a policy that often leaves its supplies far more expensive than those available on the open market.

Oettinger says that Russia is the EU’s most important partner in the energy sector, therefore the EU is willing to continue developing relations with energy giant Gazprom. However, he says that the antitrust investigation that the European Commission launched is not directed against Gazprom, it is aimed to ensure the same conditions for all market participants.

Objectives in the energy sector can be attained only if the Baltic region engages in close cooperation, added Oettinger. “The goal of Europe is to ensure a safe energy supply. These goals can only be achieved via close regional cooperation. Therefore, we must get mobilized. I am happy that today we have an opportunity to continue discussions on this issue. We must find a way which would allow us to succeed in our goals via regional initiatives,” he said at the conference.
Help from Brussels

In Friday’s meeting with Oettinger, Lithuanian President Dalia Grybauskaite thanked the European Commission for daring to launch the investigation into Gazprom’s monopolistic position. The president says that the EU’s support is essential to Lithuania when it comes to implementing the Third Energy Package.
Grybauskaite stressed that the goal of Lithuania to turn into an energy-independent country has become an interest of the entire EU. At the EC’ss initiative, the new financial framework of the EU suggests substantial funding to build new electricity and gas links. They are necessary not only for the purpose of reducing energy dependence: building energy infrastructure will also contribute to the economic growth in Europe.

Besides Lithuania, the countries allegedly affected by Gazprom’s practices are Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Poland and Slovakia.
“Vladimir Putin knows very well, and has to accept certainly, our European internal market rules,” Oettinger added, underlining that with 500 million people, the EU was a crucial customer for Gazprom.