EU Said to Review Gazprom Complaint Amid Ukraine Crisis

European Union officials are reviewing an antitrust complaint against OAO Gazprom (OGZD), the Russian state-controlled gas company, as they weigh how the two-year-old dispute will affect the conflict in Ukraine, according to people familiar with the case.

The case against Gazprom could be delayed until the crisis cools or be used as additional leverage in negotiations in response to Russia’s deployment of troops in Ukraine’s Crimea region, said one of the people, who asked not to be identified because the review is confidential.

“Sometimes we see statements of objections which are accelerated or decelerated because of political imperatives,” Mark Powell, a lawyer at White & Case LLP in Brussels, said. “It wouldn’t surprise me if the commission decided to park this for a while and see what happens.”

Russia is tussling with the West for influence over Ukraine, which claims its former Soviet master seized control of Crimea by deploying troops to block army bases and airports. The U.S. and Europe have threatened sanctions against Russia and are racing to seal billions of dollars of aid to help the new administration in Kiev avoid bankruptcy. Russia says Ukraine owes Gazprom $2 billion.

EU diplomats held back from imposing sanctions on Russia as the bloc’s foreign ministers this week called on President Vladimir Putin to take immediate “de-escalating steps” to give the Kremlin a chance to pull back its troops and seek a negotiated outcome. EU President Herman Van Rompuy called a leaders’ summit for today to consider the next steps.

Gazprom Shares

“Gazprom is ready for any decision, we are sure we have been always fulfilling all European rules,” Sergei Kupriyanov, a Gazprom spokesman, said by phone.

Developments in Ukraine, which Gazprom uses as a transit point to supply about 16 percent of European demand, have caused shares of Russia’s state-owned gas export monopoly to fall 12 percent over the last week in Moscow trading as of yesterday.

“We continue to work on the preparation of the draft statement of objections, which has not been finalized at this point,” Antoine Colombani, a spokesman for the European Commission, said in an e-mail.

The EU suspects Gazprom of abusing its market power to impose unfair prices in central and eastern Europe by linking what it charges for long-term natural gas contracts to oil prices. The commission is also concerned the Russian company may have prevented gas from being traded between countries and hindered the customers from find new energy providers.

EU Raids

The EU’s probe, which saw raids on offices of Gazprom and its customers in 2011, focuses on several Baltic states, Poland, the Czech Republic, Slovakia, Hungary and Bulgaria, Almunia said last year.

The EU’s antitrust case is “obviously an instrument” if there were a desire to use it, said John Lough, a Russia specialist at Chatham House, a policy group in London. “It should be looked at closely.”

EU Competition Commissioner Joaquin Almunia said last month that regulators had almost completed an antitrust complaint against Gazprom. The so-called statement of objections is being reviewed by officials in several commission departments, including energy, industry and legal service, according to one of the people.

Attempted Settlement

Gazprom attempted to settle the EU antitrust last year. The proposals made by Russia’s state-owned natural gas export monopoly fell short of addressing the commission’s concerns, Almunia said last month.

Negotiations between Gazprom and the EU have continued and another meeting was held yesterday, according to another person with knowledge of the case. The company may make a new settlement offer before the end of the month, the person said.

The antitrust case will have to be based on “facts and evidence” as it needs to stand on solid ground from a legal point of view, said Alan Riley, a law professor at City University in London. The matter “goes on quite separately” from discussions about EU-Russia relations in light of developments in Ukraine.

To contact the reporter on this story: Gaspard Sebag in Brussels at gsebag@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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