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Central Europe
March 17, 2017 www.intellinews.com I Page 10
EU asks CEE to comment on Russian gas promises
bne IntelliNews
The European Commission has invited comments from Central and Eastern European (CEE) states on proposals put forward by Russian gas giant Gazprom to meet competition concerns.
Countries in Central and Southeast Europe are,
for the most part, hugely reliant on Russian gas im- ports. The likes of Lithuania and Poland have in the past fought legal battles over the price and condi- tions contained in long-term contracts with Gazprom, and argue that Moscow uses its dominant position to maintain political leverage across the region.
The European Commission case, which began with raids on Gazprom offices in 2011 and was formally launched in 2012, focused on gas sup- plies to eight EU states – Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Po- land, and Slovakia. However, talks with Gazprom since then has resulted in a compromise proposal from the Russian state gas company.
Although Brussels said it wants to hear the opinions of the consumers in those countries, the EU stance over the deal on the table appears clear. The com- missioner in charge of competition policy, Margrethe Vestager, said: “We believe that Gazprom's commit- ments will enable the free flow of gas in Central and Eastern Europe at competitive prices. They address our competition concerns and provide a forward- looking solution in line with EU rules. In fact, they help to better integrate gas markets in the region.”
Gazprom says it will remove restrictions to re-sell gas cross-border once and for all, which formerly saw states forced to pay for unused gas via ‘take- or-pay’ clauses. The restrictions also dented energy security efforts by suppressing the oppor-
tunity for states to sell on Russian gas to others in need. CEE states have found themselves without gas – or threatened with limited supply – on more than one occasion when politics have interrupted flows from the east.
Gazprom also promised that prices in CEE would better reflect competitive price benchmarks. The company also said it will not act on any advan- tages concerning gas infrastructure, which it has obtained from customers by having leveraged its market position in gas supply.
However, the proposed deal and the Commission’s backing of it will cut little ice with certain parts of Central Europe that have a long suspicion of Russia.
Poland is in the midst of efforts to block the construction of Nord Stream 2, an addition to the line under the Baltic Sea with a capacity of 63bn cubic metres per year that delivers gas directly to Germany. Warsaw has also blasted a recent com- mission deal to allow Gazprom to raise deliveries through Nord Stream 1. The pipeline is part of Russia's plan to re-route all European deliveries away from the main line through Ukraine by 2019.
Unsurprisingly, Poland's main gas utility PGNiG
- which has led the opposition to Nord Stream
2, was not impressed. “Our initial assessment shows that the commitments are insufficient to remove the negative impact of Gazprom competi- tion breach in the CEE markets, including Polish market,” CEO Piotr Wozniak told the FT. “They may not make any significant contribution to change the situation that triggered the commission action in 2012. We consider the commission’s acceptance of those commitments as highly insufficient.”