June 22, 2007 (the date of publication in Russian)
THE EUROPEAN COMMISSION VERSUS "GAS GIANTS"
Antimonopolism with a doubtful smell
During the last month, top European Commission's officials repeatedly promoted the idea of separation of European gas producing and energy generation corporations into independent transport and distributing companies. In this way, it was supposed to create a unified market of gas and electric energy in the EU framework. The imposed model was adopted only by Gasunie Corporation (Netherlands), which separated into N. V. Nederlandse Gasunie (specializing in transportation and storing) and Gasunie Trade & Supply B.V. (extraction, purchase and distribution). The first of the two companies became a 100% property of the Government of the Netherlands. This nationalization is supposed to "provide equal access to gas infrastructure" for alternative market players.
Meanwhile, Germany's E.ON, Italy's ENI and Gaz de France are not going to separate. On the contrary, they develop new plans of mergers and acquisitions. In this policy, they are supported by the governments of the three most powerful EU states. The top managers of the corporations, as well as the leaders of those states, are convinced that in this way, they could better guarantee stability of the unified European energy market. It is true that for E.ON, which owns assets in practically all European countries, national borders are a mere conventionality.
Recently, ENI's president Paolo Scaroni shook the European audience with a far-reaching statement. "To my mind, the gas and electricity networks in Europe should be integrated", he said to La Stampa. "We require a gas network, unifying a number of European states, enabling, for instance, Spain – in case of necessity – to service the Italian market. In this way, energy supply of particular countries will be more reliable. The European Union should undertake certain measures in this direction", Scaroni emphasized, proposing to unify large-scale European companies, including ENI.
However, the European energy corporations are not enthusiastic over signing a pact of that kind. Today, the leading corporations of Germany, France and Italy are continuing their fight for energy assets. In its turn, Russia's Gazprom has got an opportunity to capitalize from the chain of mergers and acquisitions, as in this process, corporations usually get rid of a number of assets which don't correspond with their long-time strategy. Some of those assets could be purchased by Gazprom.
To tell the truth, emergence of a single European energy company would not inspire Gazprom's leadership, as it would put an end to competition among Gazprom's major clients. However, the initiatives of the EU bureaucracy are far more disturbing.
EC's experts are pursuing a diametrically opposite objective, attacking both Gazprom and the three above mentioned energy giants. They insist that EU member countries give up their duties on energy policy in favor of the Brussels bureaucracy. At the same time, they insist that all the energy corporations be separated into transporting and distributing companies. Today, the energy ministers of Europe's strongest countries are not enthusiastic about this initiative. Therefore, the Brussels bureaucracy is reaching out to the political leaders of Eastern Europe, whose countries' markets are mainly divided among major European corporations. Neelie Kroes, European Commissioner for Competition, recently declared that in case the relevant plan is approved, Gazprom will be forced to sell it distribution networks in Europe.
Russia's Gazprom presently owns large stakes in companies, involved in delivery and distribution of energy resources, such as Eesti Gas (37%), Latvijas Gase (34%) and Lietuvos Dujos (37.1%). In Germany, Gazprom invests in construction of gas pipelines through its daughter company Wingas, and in Bulgaria through Overgas. A joint venture of Gazprom and Germany's BASF and E.ON (24.5% each) is now involved in construction of the Russian-German North Stream pipeline.
EC's arguments, ostensibly derived from economic principles of free competition, are too visibly politicized, and definitely by interests alien to Europe. Directly or indirectly, the EC appeals to the anti-Russian sentiment, deliberately instigated by Washington especially in Eastern Europe. This happens right on the eve of the EU summit, where Poland, today's "stronghold" of this sentiment, would challenge the whole European Community over basic, crucial issues like the Constitution.
Shaking the foundations of European integrity, Warsaw actually intended to challenge the EU's corporate basis, particularly the German corporations, involved in the North Stream project. The Brussels bureaucracy was definitely aware of that, as obvious from the timing of the "anti-monopolist" campaign.
E.ON, Gazprom's partner in North Stream, proposed its own initiative for the European Commission. It suggests that the major companies should make its transport divisions more transparent and independent, without any changes in their ownership. Exactly the same policy is pursued today by Gazprom.
Anticipating a defeat in the strategic issue, EC functionaries are trying to reach success in a number of smaller secondary issues. In particular, the Commission managed to convince major corporations to refrain from long-term delivery contracts. Now, they are supposed to strike deals for a term of not more than a year. Luckily for the European consumers, the corporations have managed to explain to the EC bureaucracy that their long-term contracts with Russia should not be denunciated, as otherwise Europe would lose guarantees of imports of key energy resources.
Meanwhile, the European Commission is also imposing revision of long-term contracts for gas transit. Austria's OMV is under an especially strong pressure: the EC demands liberalization of access to its gas transport infrastructure. This would mean to open doors for companies which don't have any own natural reserves. Therefore, these intermediates are already offering Gazprom their services in transit of Russian gas across European countries. It is clear that for the Russian corporation, it would be preferable to cooperate with a long-time and reliable partner than with small traders, born yesterday and possibly vanishing tomorrow. Last year, Gazprom signed an agreement with OMV on increase of capacity of WAG, the OMV-owned pipeline company, and a contract or annual transit "blue fuel" until 2027.
Realizing that the offensive at major European giants is bogged down, the Brussels bureaucrats raise a dispute over "alternative kinds of fuel" for the sake of Mother Nature. The "anti-monopolist" experts argue that all the gas extracting companies should add the so-called "biogas" (produced from cattle dung) into motor fuel. This initiative strongly smells of an administrative monopoly under an ideological cover.
The confrontation between the EC bureaucracy and the top management of major European energy companies is going to continue. Most probably, the tendency of enlargement will overcome, and the EC functionaries will have to satisfy themselves with guarantees of "improvement of transparency".
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