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Russia' s EU envoy: Don' t want "gas war" over Gazprom probe

Laurence Norman, Dow Jones Newswires

BRUSSELS--Russia wants to avoid a "gas war" with the European Union over its probe of OAO Gazprom  and would welcome a negotiated settlement between the energy giant and European authorities, its ambassador to Brussels said Thursday.

"We always favor negotiated solutions because nobody wants a gas war," Russia' s EU ambassador Vladimir Chizhov told The Wall Street Journal in an interview. "If Gazprom acts within the framework of the laws of my country...and reaches some kind of agreement, be it with the Commission, or be it with member states, or be it with European energy companies...I would only welcome it."

The European Commission Tuesday launched an investigation into whether Gazprom had breached antitrust rules by hindering the free flow of gas across EU member states, preventing countries from diversifying their gas supplies and imposing unfair prices on its customers by insisting that the price of its gas be linked to oil prices.

Gazprom said Wednesday it has followed "all the norms of international law and legislation" while Russia' s economy minister said the probe was driven by "political factors."

Mr. Chizhov said his government still hadn' t been formally notified of the investigation and that he was confident that if the EU' s antitrust authorities carried out an "objective" probe, they will conclude that "Gazprom is a company that is acting within the proper legal framework."

And he played down talk of retaliation by Russia against European energy companies. "At this stage, an investigation has been launched. Let' s solve the problems as they appear."

If the EU' s executive decides that Gazprom has broken EU laws, it has several options, including negotiating a settlement with Gazprom, fining the company up to 10% of its worldwide revenue and forcing Gazprom to revise its contracts.

Without directly contesting the EU' s powers, Gazprom said Wednesday it expected the EU to factor in that the company is a Russian-administered company administered by Russia' s government.

Mr. Chizhov echoed that point but acknowledged the EU is free to conduct probes as it wishes. "The European Commission can look into anything it wants: whether there is life on Mars or whether there are some irregularities in Google or Gazprom or Microsoft," he said.

The Russian ambassador said he was a "little bewildered" by the EU probe, which came after a series of raids of Gazprom and other companies last September. In particular, he questioned why the EU was concerned about the linking of gas and oil prices, which he said was a widely used practice that had also been used by European companies.

The EU probe focuses on Gazprom' s behavior in eight countries, including the Baltic states, Poland and other eastern European countries. Russia supplies 36% of the EU' s natural gas but is effectively the sole supplier to many of these countries.

Mr. Chizhov warned the probe could unsettle EU-Russia ties but was confident it wouldn' t destroy what should be a "strategic partnership." "It complicates our dialogue of course. I wouldn' t say it destroys anything. That would be an exaggeration. But we have a number of irritants we have to address," he said.

Energy issues have long weighed on bilateral ties between the EU and Russia. Gazprom' s domination of the eastern European market has long concerned the EU' s executive, particularly since Russia cut off supplies to Ukraine and parts of eastern Europe in 2006 and 2009.

Russian President Vladimir Putin has slammed the EU' s energy reforms--aimed at splitting gas suppliers from pipeline ownership in the EU--as property confiscation.

09/06/2012

 

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