April 3, 2018 / 2:56 PM / 23 days ago

Exclusive: Gazprom set to gain EU antitrust approval with concessions - sources

BRUSSELS (Reuters) - The European Union and Gazprom (GAZP.MM) are poised to settle a long-running antitrust case after the Russian gas company agreed to price reforms and to allow rivals to gain a foothold in eastern Europe, people familiar with the matter said.

The logo of Russian gas giant Gazprom is seen on a board at the St. Petersburg International Economic Forum 2017 (SPIEF 2017) in St. Petersburg, Russia, June 1, 2017. Picture taken June 1, 2017. REUTERS/Sergei Karpukhin

A decision by the European Commission could come as early as this month although the timing could still slip, the people said. A settlement would allow Gazprom to avoid a possible fine of as much as 10 percent of its global turnover.

The seven-year-old case underlines the rocky relationship between Europe and Russia, which have clashed over Ukraine, Syria and, most recently, a nerve attack against a former Russian spy living in England that resulted in expulsions of diplomats on both sides.

Last year, state-owned Gazprom, which supplies a third of the EU’s gas, offered to link prices to benchmarks such as western European gas market hubs and border prices in France, Germany and Italy, and allow price reviews every two years.

This aimed to address complaints of excessive pricing in Bulgaria, Estonia, Latvia, Lithuania and Poland vis-a-vis German prices due to Gazprom’s policy of locking clients into decades-long, oil-indexed contracts.

The company also pledged to scrap all contractual restrictions which bar clients from reselling its gas and let the Bulgarian transmission network operator take charge of the Balkan country’s gas flows to Greece.

Gazprom will drop its $70 million claim for damages from Bulgarian partner BEH following the 2014 cancellation of the South Stream gas pipeline project that would have shipped Russian gas under the Black Sea via Bulgaria to central Europe.

    Gazprom has tweaked its original proposal on concessions after negative feedback from EU countries and customers but the main elements remain unchanged, according to a recent draft seen by Reuters.

    Revisions have been mainly technical such as lower service fees charged by Gazprom which could result in its clients saving millions of euros. The concessions are expected to apply for eight years and be monitored by a trustee.

    Both the Commission and Gazprom declined to comment.

    The EU competition enforcer has rejected a complaint by state-run Polish oil and gas company PGNiG (PGN.WA) which wants Gazprom to sell its controlling stake in companies that own key gas infrastructure in the EU, including the Jamal-Europe gas pipeline, two other sources said.

    The EU had previously said this was not covered by the bloc’s antitrust rules because it was a bilateral deal between the Polish and Russian governments.

    Gazprom found itself in the EU antitrust crosshairs in 2011 after regulators raided about 20 offices of its customers in eastern and central Europe, seizing more than 150,000 documents.

    At issue was whether Gazprom had imposed unfair prices by linking gas price to oil prices, divided up gas markets by hindering the free flow of gas across EU countries and prevented the diversification of the supply of gas.

    Reporting by Foo Yun Chee; Additional reporting by Oksana Kobzeva in Moscow; Editing by Francesco Guarascio and Susan Fenton

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