How fighting monopolies at home can help fight monopolies abroad

September 20, 2007

EU Energy market liberalisation, relations with Russia and Gazprom, the merger between Suez and Gaz de France – interesting stories coming up….

The EU’s current plans to open up the internal European market for energy displeases the national champions Eon and GdF. But they also displease Gazprom.

The best summary of the story, as so often, by the FT:

Gazprom and other non-European Union businesses will be able to control energy network assets in the EU only if they meet tough conditions under proposals set out on Wednesday. (…)

Energy companies were working to understand the implications of the proposals, but on the face of it, the move would prevent Gazprom from owning controlling stakes in businesses with infrastructure assets, such as RWE of Germany or National Grid of the UK.

The Commission’s move represents a new stage in a tussle to ensure reciprocal access to the Russian energy market for EU companies, where they face investment restrictions. The suggestion is part of a package of measures further to liberalise EU energy markets, amid concerns that competition is stifled in parts of the sector.

Under the plans, big EU energy generating companies such as EdF of France and Eon of Germany would have either to sell their transmission networks or hand over control to an independent group to ensure new entrants could compete.

Non-EU companies would have to meet these conditions as well if they were to take a controlling stake in pipelines or cables. In addition, their countries of origin would need to offer EU companies reciprocal access to their energy markets. “

Russia-blogger and lawyer Robert Amsterdam has an excellent hot post on the matter, and many other interesting articles on Russia, Gazprom and the rest.

The EU seems to be following Katinka Barysch’s advice saying that “Reform is the answer to Gazprom”.  However, tying signing of the Energy Charter (the Russians will not do it as long as the oil price is $80) to access to the European Markets on competitive rules-based laws introduces an element of discrimination that can potentially sour relations between the EU and Russia even more. Whereas the pure “rule-of-law” approach that would subject Gazprom to the same rules as Gaz de France without any extraneous conditions would give more legitimacy to the move and avoid feeding into the Kremlin’s poisonous rhetoric.

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