EU: Gazprom must play by rules

Sept. 17, 2012 at 6:30 AM
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VILNIUS, Lithuania, Sept. 17 (UPI) -- Russia and its Gazprom oil and gas monopoly need to recognize and play by the European Union's market rules, EU Energy Commissioner Guenther Oettinger says.

Oettinger made in the remarks Friday in Lithuania, a country entirely dependent on Russian natural gas imports and which is seeking to spin off ownership of its gas transmission network in accordance with the European Union's energy market reform efforts, the Sofia News Agency reported.

Oettinger told attendees to an energy conference in Vilnius the Kremlin needs to "accept our European Union rules" as it comes under fire for allegedly seeking to limit natural gas supplies and artificially raise prices for its European customers.

Gazprom sets its prices under long-term contracts linked to oil prices, and as oil prices have remained stubbornly high, so have the prices it charges for gas. That means national suppliers have to sell the gas to their household customers at lower retail levels.

That situation prompted the European Union to announce this month it had opened formal proceedings to investigate whether Gazprom was obstructing competition in Central and Eastern Europe, which led to a decree from Russian President Vladimir Putin last week banning Gazprom and other state-owned companies from disclosing information to foreign regulators.

With the EU-Russia gas pricing row becoming a political issue, Oettinger reiterated the European Union's determination to protect Lithuania and other Eastern and Central European countries from energy price-gouging, the news agency reported.

"All gas exporters, be it from Russia or Norway, Algeria or Qatar, have to accept our internal market rules," Oettinger said. "The Russian partners understand our rules, but they don't accept them all. It is a different culture."

Putin, he added, "knows very well that Russia has to accept the rules of our internal market with 500 million consumers. It's the biggest business case for Gazprom."

Lithuanian has complained Russia is playing politics with gas prices, intentionally raising them as punishment for moving to "unbundle" ownership of its gas transmission sector as called for by EU energy directives.

Gazprom holds 37 percent of the Lithuanian energy company Lietuvos Dujos, with the state owning 17 percent. Vilnius is battling in court to spin off its gas transmission operations into a separate company which it hopes to establish by July 2013 and have operational by October 2014.

That would mean Gazprom would be ousted from its ownership role in the pipeline network. Lithuanian Energy Minister Arvydas Sekmokas has repeatedly called for the state to own the transmission pipelines.

But Putin has said it's the European Union that is playing politics by seeking to examine the business practices of Gazprom.

The Russian president said last week at a summit for Asia-Pacific Economic Cooperation in Vladivostok, Russia, the European Union is using the issue to try to extend its influence over Eastern Europe.

"Europe wants to maintain political influence (in the region) but in such a way that we pay for it a little," he was quoted by Russia's state-run news agency RIA Novosti as saying.

Putin described the investigation as counterproductive but cautioned it didn't amount to a trade war with Europe.

"I hope the situation will be resolved without any problems for either Gazprom or the EU," he said.

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