Russian gas giant Gazprom escapes antitrust fine as EU imposes binding 'rulebook'
The European Union has stopped short of fining Gazprom in a settlement aimed at preventing the Russian energy giant from hiking gas prices in central and Eastern European countries.
Magrethe Vestager, the commissioner in charge of the European Commission’s antitrust department, announced a series of binding rules on Gazprom, which is the dominant gas supplier in the region and has accepted the EU’s conditions.
But she warned on Thursday that if state-owned Gazprom ignored the EU’s new “rulebook” to enforce fair pricing, it faced a massive fine of up to 10pc of its global turnover.
Mrs Vestager insisted the threat was not “empty theory” at a Brussels press conference after cautioning the penalty could be levied without the EU having to prove the company broke competition law.
"Our decision provides a tailor-made rulebook for Gazprom's future conduct," she said. "It gives Gazprom customers in central and eastern Europe an effective tool to make sure the price they pay is competitive."
The decision marks the end of the EU's seven-year tussle with Gazprom, which it accuses of partitioning gas markets in eight member states to charge higher prices in Bulgaria, Estonia, Latvia, Lithuania and Poland.
The bloc's addiction to Russian gas supplies were brutally exposed by the Ukraine crisis, when the threat to turn off supplies was used to leverage political pressure against the EU. Controversy surrounds the Nord Stream 2 gas pipeline, which would see Gazprom circumvent Ukraine, denying it lucrative transition fees, to supply the German market.
“This case is not about the flag of the company – it is about achieving the outcome that best serves European consumers and businesses. And the case doesn't stop with today's decision – rather it is the enforcement of the Gazprom obligations that starts today,” said Mrs Vestager.
Gazprom must remove any restrictions preventing customers from reselling gas across borders and enable gas flows to the Baltic states and Bulgaria, which are “energy islands” isolated from the rest of the EU through a lack of interconnectors.
The company must also submit to a system that ensures the gas price in Eastern Europe reflects the more competitive price level in Western Europe.
Gazprom supplied the European Union with more than a third of its gas last year, but Russia's dominance is kept in check by the huge volumes imported via pipelines from Norway and super-chilled tankers from Qatar.
Gazprom has also undertaken not to leverage its dominance in gas supply or act on any advantages it may have gained in gas infrastructure through its dominance.
Mrs Vestager said: “This will significantly change the way Gazprom operates in central and eastern Europe.”
Gazprom's final warning from Brussels to loosen the grip on its Eastern European neighbours comes amid a rumoured retreat from the West as political relations sour.
In the wake of the Skripal poisoning scandal Gazprom has begun cutting roles from its energy trading desk in London. It is understood to be mulling a complete shutdown of its 1,000-strong London headquarters, near Regent’s Park, to consolidate its global energy market activies from its St Petersburg base.
The company has already merged its oil and liquefied natural gas (LNG) trading desks, making a handful of LNG traders redundant in the process.
