Gazprom-EU dispute unresolved after four years

BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/46

A probe by the European Commission found that Gazprom’s operations violate EU competition rules in many member states of Central and Eastern Europe. The European Commission launched its investigation in September 2012 and its official notice (statement of objections) was submitted to Gazprom in April 2015. The Commission found that Gazprom was engaged in restricting competition, unfair pricing and linking supplies to control of distribution grids in two EU member countries. Observers say that Gazprom may offer to change its pricing practices and supply conditions to avoid possible fines imposed by the European Commission. The matter is still pending, and Gazprom has yet to respond.

At the end of October, the European Commission, however, gave its go-ahead for making it easier for Gazprom to use the Nord Stream 1 twin gas pipeline system. The pipelines run along the Baltic seafloor to Greifswald, Germany. From there, gas is transmitted either to the south to the German-Czech border via the OPAL pipeline or via the NEL pipeline towards Hamburg. The Commission had previously limited Gazprom to using half of OPAL’s capacity to avoid an excessively dominant market position, particularly in the Czech market. The ruling essentially limited the use of the entire Nord Stream 1. Under the new ruling, Gazprom can use up to 80 % of OPAL’s capacity under certain conditions, thereby increasing the utilisation of Nord Stream overall. Nord Stream utilisation this year has risen to 75–84 %. A Gazprom-led consortium is currently planning a new twin Baltic Sea pipeline. The Nord Stream 2 would follow the Nord Stream 1 route and double annual transmission capacity from 55 to 110 billion m³.

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