Today: August 20 2018
russian English greek latvian French German Chinese (Simplified) Arabic hebrew

All that you will be interested in knowing about Cyprus on our website Cyplive.com
the most informative resource about Cyprus in runet
To withdraw the claims from Gazprom, Europe chose a special moment

To withdraw the claims from Gazprom, Europe chose a special moment

25 May 2018
Tags: Russia, Economy, Gazprom, EU, Gas, European Commission, Analytics, Europe

The antimonopoly investigation, which the European Commission has been conducting for six years against Gazprom, is finally closed. The Russian company was threatened with giant, billion-dollar fines, and now it's over. Why did the EC make such a gift to Russia now and what will it take from Gazprom?

Gazprom and the EU agreed on the settlement of the antimonopoly case, the EC said in a statement. Gazprom is satisfied with the European Commission's decision on it, said Alexander Medvedev, the deputy chairman of the board of the Russian gas exporter. According to him, the decision is the most acceptable for the gas market of the EU countries. Gazprom has always complied with the competition requirements in the EU and will continue to comply with them in the future, he added.

In this case, the Russian company was threatened with a huge fine - up to a third of annual revenue from operations in the European market. Given that the proceeds from the sale of gas to non-CIS countries in the 2017 year amounted to 1,6 trillion rubles, only last year Gazprom would have to pay 480 billion rubles or 6,6 billion euros if the matter took a different turn. In 2016, Gazprom's revenue in Europe amounted to 1,4 trillion rubles, which means that the fine could be 420 billion rubles or another 6 billion euros.

It is much more advantageous to agree in such a case. And Gazprom made concessions, which Brussels informed last year. And now, finally, the EC has given good and closes the antitrust case. What will Gazprom do to avoid paying multibillion-dollar fines, and was it worth it?

First, the EC obliged Gazprom to ensure gas supplies to Central and Eastern Europe at competitive prices. EC made these obligations legally binding under Art. 8 EU antitrust regulation. If Gazprom violates this obligation, then it will be fined up to 10% of the company's global turnover.

The second point is that Gazprom should allow re-export of Russian gas to its customers in the EU.

The third point is that Gazprom should not demand compensation from Bulgaria for the cancellation of the South Stream project.

"Actually,

Gazprom fulfilled these conditions by the 2014 year. Just EC was not with the hand so quickly recognize this.

And the decision was taken by the Europeans last year, but they did not publish it against the backdrop of the tension between the EU and Russia. We were waiting for a more peaceful moment, "said Igor Yushkov, the leading expert of the National Energy Security Fund.

The withdrawal of this decision can now be explained by Europe's desire to support Gazprom and its pipeline project against the backdrop of a clear threat from the US to flood Europe with its expensive LNG and, in general, under the trade pressure of Washington on other fronts.

"The politicization of the issue around the" Nord Stream - 2 "has reached its climax. Against this backdrop, the EC closes the antimonopoly case, says that Gazprom has corrected everything, there are no more claims to it, that it works within the framework of the legislation. The solution of this decision now, and not last year, is much more profitable for Gazprom. Europe thereby shows that all of Gazprom's activities are exclusively economic, that "Nord Stream - 2" is not a political project and it needs to be realized, "Yushkov said.

As for the abolition of re-export, then, according to him, Gazprom has already introduced this item almost all the contracts for a long time. "Otherwise there would be no reverse gas from the EU to Ukraine. After all, where do the gas from Hungary, Slovakia and Poland come from for Ukraine? They do not extract it, but are engaged in the re-export of Russian gas, "the expert of the NESB said.

The price policy of Gazprom in the EU has also become more sparing largely due to the fall in oil prices and, consequently, gas. On average, the price of Russian gas in Europe in 2017 was 179 dollars per thousand cubic meters. "At all, the price is now about the same. Only in Germany is slightly different. Gazprom admits that it makes a discount. But he defended his position: with Germany strong cooperation, there is an asset exchange program, through which Gazprom entered German marketing companies, and the Germans are mining in Russia, "Igor Yushkov explains.

Gazprom will not have to cut prices, because they are already so low. "Russian gas is cheaper not only for LNG, but also for gas on the spot market. What kind of monopolist is this, who has the cheapest offer on the market? This is absurd, "the source added. The same Lithuania and Poland have their own LNG terminals, but they do not use them at full capacity. They could buy more LNG, but they do not, because they are not happy with the prices. Whereas thanks to a good proposal, Gazprom has set records for the volume of supplies to Europe for two years.

The EC also insisted on the introduction of a spot component in the formula, but at the request of the client, Gazprom has long been introducing this variable. Another thing is that if oil prices fall again, then pegging to the spot may prove to be unprofitable.

European Commissioner for Competition Margret Vestager added that the settlement of the antimonopoly case against Gazprom does not prevent interested persons in Central and Eastern Europe from demanding compensation from him through the national courts. But in this there is nothing new. In long-term contracts and so it is written that every few years a consumer can apply for a price review, and if Gazprom does not agree, then the issue is decided in court. And absolutely all Europeans have done so. As a rule, European courts sided with consumers, and Gazprom cut prices. Often Gazprom, without waiting for a court decision, provided a discount and even paid retroactive payments.

To expect an influx of lawsuits against Gazprom is unlikely. "It will be very difficult for the consumer to justify why he wants an even cheaper gas. Earlier, spot prices were used as an argument, which were lower, but now on the spot, gas is more expensive than under contracts with Gazprom. Now, on the contrary, Gazprom should have gone to the courts and demanded to raise prices that fell due to unreasonable market movements, "Yushkov said ironically.

As for the curtsey towards Bulgaria and the refusal to compensate for the failure of the South Stream, this point, of course, looks foreign - it obviously has nothing to do with the antimonopoly proceedings. The project was closed for political reasons after Bulgaria was visited by US senators. And the European Commission then succumbed to the influence of the United States. "Most likely, when Brussels forced Bulgaria to abandon the South Stream, they promised to settle the matter with huge costs, cover up the Bulgarians, hence the demand for Gazprom," the source concludes.

Olga Samofalova
LOOK
GTranslate Your license is inactive or expired, please subscribe again!