EU-Gazprom agreement expected next week

European Union and Gazprom are to announce by next week that they have put an end to a seven-year dispute over competition, after the Russian group has agreed to change its pricing formula and allow rivals to gain ground in Eastern Europe, people close to the matter told Reuters on Monday.

One of these sources said that the European Commission is to announce the agreement on May 24, and two other sources feel that a European decision in the Gazprom file could be announced this week or the next one. This agreement will allow Gazprom to avoid fines of up to 10% of its global business figure.

According to a recent draft seen by Reuters, Gazprom, which provides one third of Europe's natural gas needs, has offered to link prices to benchmarks such as western European gas market hubs and border prices in France, Germany and Italy, but also to allow prices to be reviewed once in every two years. Gazprom also promised to drop all contractual constraints which bar clients from reselling the gas that they bought from the company and also to let the operator of the gas pipeline network in Bulgaria to deal with the gas deliveries to Greece.

These concessions would be valid for eight years. The European Union will not impose penalties on Gazprom, but if the Russian group does not respect the terms of the deal, the EU may impose fines.

Critics consider that European Competition Commissioner Margrethe Vestager's decision to reach an agreement with Gazprom without the Russian company admitting wrongdoing contrasts with the EU's fine imposed on large US companies such as Google and Qualcomm for their anti- competitive practices.

EU antitrust regulators argue that an agreement with Gazprom could help the bloc solve disputes on gas supplies to and through Ukraine. An understanding could also help liberalize the South East European gas market, for example by allowing reverse flow deliveries and giving rivals access to the pipeline network.

Gazprom caught the attention of the EU antitrust regulators in 2011, when 20 offices in 10 countries have been subject to dawn raids, and investigators seized over 150,000 documents.

Source:RRA,Reuters.Translated by Miruna Matei