Putin Warns EU That Gazprom Antitrust Probe May Cause Losses

Russian President Vladimir Putin warned the European Union it should resolve an antitrust probe into Russia’s gas-export monopoly, OAO Gazprom (GAZP), to avoid “losses on both sides.”

The 27-member EU is trying to shift the responsibility for subsidizing former Soviet bloc EU members onto Russia because of economic weakness, Putin said today at the Asia-Pacific Economic Cooperation Summit in Vladivostok. The EU on Sept. 4 announced that it’s investigating Gazprom’s long-term gas supply contracts in central and eastern Europe.

“This is not a constructive approach,” Putin told reporters. “We are counting on getting out of this situation through a businesslike and friendly dialogue between our economic entities and the European Commission without losses for both sides.”

Gazprom, the world’s largest natural-gas exporter, supplies about a quarter of European gas. It faces a potential fine of $14.5 billion as companies found to violate EU competition rules can be fined as much as 10 percent of annual revenue. Gazprom fell 1.8 percent on Sept. 5, the day after the announcement, which was made after trading hours in Moscow. It was the biggest decline since July 31.

The European Commission is investigating whether Gazprom imposed unfair prices by linking natural gas and oil prices, preventing gas from being traded between countries and hindering the diversification of supply.

EU Raids

Gazprom and customers including RWE AG (RWE), E.ON AG (EOAN)’s Ruhrgas and Hungary units, OMV AG (OMV) and Polskie Gornictwo Naftowe I Gazownictwo SA (PGN) in Poland were raided by EU officials last year to uncover information on prices and supplies.

While the Soviet Union provided subsidized gas to its Communist satellites in central and eastern Europe, Russia now delivers the fuel under market-based, long-term contracts, Putin said.

“At a time of crisis there is a desire to shift the burden onto other countries, this kind of temptation arises,” the Russian leader said. “United Europe wants to keep its political influence and for us to pay a little for that.”

Gazprom said its pricing policies were “in full conformity” with legal standards applied by other natural gas producers and exporters and that it “scrupulously abides” by international and national laws in the regions where it operates.

While Gazprom has yielded to pricing demands from German and French customers, it has conceded little to countries further east, which are largely dependent on Russian gas, according to Patrick Heren, a London-based consultant.

Gazprom estimates export revenue from sales to Europe will rise this year to $61 billion from $57 billion last year, approaching the record $64 billion in 2008, Deputy Chief Executive Officer Alexander Medvedev said on June 20.

To contact the reporters on this story: Ilya Khrennikov in Vladivostok at ikhrennikov@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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