September 9, 2012 / 5:49 AM / 7 years ago

Russia's Putin rules out trade war with EU over Gazprom

VLADIVOSTOK, Russia (Reuters) - Russian President Vladimir Putin on Sunday dismissed any talk of a trade war with Europe over a European Commission competition investigation into state-controlled gas monopoly Gazprom.

“We have very warm, constructive relations. It is not a trade war,” Putin told reporters after an Asia-Pacific Economic Cooperation (APEC) summit in the Russian port city of Vladivostok.

The European Union’s executive Commission opened the inquiry on Tuesday into suspicions that Gazprom, which is more than 50 percent owned by the Russian state, is hindering the free flow of gas across the EU and mistreating its customers by linking the cost of gas to oil prices.

However, Putin linked the recent investigation to European debt crisis, blaming some of the European Commision officials in desire to shift internal problems to Russia.

“Primarily, it (the probe) stems from the tough economic situation in the euro zone as we are talking here mainly about Eastern European countries. The European Union is largely subsidising Eastern European economies,” Putin said.

“It seems that now someone in the European Commision decided that we should share a part of this burden ... But this approach is not constructive.”

Europe buys around a quarter of its gas from Gazprom, Russia’s export monopoly, typically under long-term contracts whose prices are mainly tied to the price of oil and only a small element linked to cheaper ‘spot’ gas prices.

Gazprom’s average Europe sale price is expected at $405-$415 per 1,000 cubic metres in 2012 - or around four times the average spot price on the U.S. natural gas market, where booming shale gas production has created a major supply glut.

Gazprom has said it was armed with legal and political reasons to respond to the investigation but, reflecting its reliance on the European market for around half of its revenues, has refrained from any action that might disrupt gas supplies.

Reporting by Gleb Bryanski; Writing by Katya Golubkova; Editing by Timothy Heritage and Douglas Busvine

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