UPDATE 1-EU ministers solve energy liberalisation stand-off

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By Pete Harrison

LUXEMBOURG, Oct 10 (Reuters) - European energy ministers cleared up final disagreements about liberalising energy markets on Friday, agreeing measures to prevent giant utilities from unfairly dominating the market.

They also approved a "Gazprom Clause", which would prevent energy companies from outside the bloc -- such as Russia's state-owned Gazprom (GAZP.MM) -- from buying up distribution networks without agreement at a political level.

"This is extremely good news for consumers and businesses in Europe," said European Commission President Jose Manuel Barroso.

"It is a crucial step towards the completion of the single market. It provides a new basis to the discussion on energy security"

The Netherlands, Spain and Portugal partly succeeded in introducing measures to protect their gas and electricity distribution networks from being bought up by diversified energy giants that still exist in countries like Germany and France.

"There is a possibility for member states to take measures ensuring a level playing field," Energy Commissioner Andris Piebalgs told reporters. "A competitive market will cut costs for citizens and companies and stimulate energy efficiency and investment."

LEVEL PLAYING FIELD

The European Union executive last year proposed dividing ownership of gas and electricity supply from pipelines and grids in a drive to help new market entrants and force down prices.

France and Germany have spearheaded opposition to any forced breakup of national energy champions, and EU energy ministers yielded to their pressure at a June summit, giving giant energy companies easier alternatives to being broken up.

But countries that have already split up their energy companies fear their networks would become vulnerable to being taken over by overseas rivals that have not been broken up and therefore have more financial fire power.

Ministers agreed measures allowing EU member states to block any such takeovers. They also said nations could block similar takeovers of power and gas suppliers, but ruled that the European Union executive would first have to approve such blocking measures.

The liberalisation deal must now be backed by the European Parliament, which has powers of co-decision alongside the energy ministers and has so far taken a much tougher line on breaking up utilities. (Reporting by Pete Harrison; editing by Christopher Johnson)