Gazprom responds: we are not abusing our position

March 1, 2010 | 00:00

Gazprom responds: we are not abusing our position

The article by Iana Dreyer, analyst at the European Centre for International Political Economy in Brussels, which we recently published, and which argues that the EU should instigate antitrust proceedings against Gazprom, has prompted a reply from Sergei Kupriyanov, official spokesman of Gazprom. Kupriyanov roundly rejects the notion that Gazprom may be abusing its market position in Eastern European countries.

Letter to the editor of the European Energy Review

Your recent article “The Competition case against Gazprom” made a number of allegations regarding Gazprom’s operations in Europe to which I would like to respond.

The article’s main argument is based on an analogy with antitrust proceedings launched by the European Commission against several West European energy companies and relies on the suspicion that Gazprom may be acting in a similar fashion. The only evidence produced in support is that Gazprom has an interest in a number of gas distribution companies in Central Europe.

There is no denying that for historical and geographical reasons Gazprom is the main supplier of gas in certain European countries, and that it has, in specific cases, chosen to be a co-investor in gas distribution infrastructure systems. But overall in Europe Gazprom is far from having a dominant position and competes alongside other suppliers – as is shown by our share of the EU gas market being 25%. Facts relating to Gazprom’s market position in some countries should not be used to construct a distorted image of the European gas market.

As EU competition law recognises, being a dominant market player does not necessarily lead to abuse of that position. The article’s allegation that Gazprom uses gas cuts in commercial disputes is completely wide of the mark.  The reality is that for many decades, and even through the darkest times of the cold war, Gazprom has been a reliable supplier of gas to Europe.  Interruptions of supply are in neither our short-term or long-term interests: they affect both our revenues and customers’ confidence.  Unfortunately last winter we were confronted with a dead-lock situation when Ukraine ceased paying for Russian gas supplies and barred Russian export gas from reaching European customers.  In this context, it would make sense to look to other parties, those which abused dominant position on their supply infrastructure.

Far from restricting investment in gas import infrastructure as the article implies, along with our EU partners we are pushing forward massive projects aimed at increasing Europe’s energy security, by diversifying supply routes and building more gas storage facilities closer to our end-consumers.  To implement such expensive projects investors need to be certain of specific levels of return, which realistically can only be secured through long-term gas supply contracts.

These contracts benefit all parties, giving gas suppliers and consumers alike the assurance of certain amounts of supply, for a given period, at prices automatically following the fluctuations of oil prices.  Indexation of prices to the world market price of oil ensures that there is no scope for unfair manipulation on the part of the supplier. It means Gazprom cannot make any gains from holding a relatively high share of a particular national market in Europe.

Gazprom has no apologies to make over the stability and security this approach has brought to Europe’s energy supplies.

Sincerely yours,

Sergei Kupriyanov,
Official Spokesman, OAO Gazprom

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