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New EU energy plan might affect Gazprom

In an attempt to make its energy market more competitive the European Commission suggests limiting the presence of energy companies from countries that do not give similar access to European firms. The new measures are meant to protect Europe's energy mar

However, the commission lets each member state determine its own investment policy.

The idea behind the reforms is to make the sector more competitive, liberalise the market and stop the big companies having too much power and to make them less influential. They have to let independent producers have access to the existing energy grids so as to give consumers more choice.

But the reforms have already caused controversy in the EU where state energy suppliers will lose considerable power. This could become controversial for Russia as well, as the country’s state-owned energy company Gazprom is one of the EU’s biggest suppliers, providing over a quarter of all the amount of natural gas. The reforms could restrict Gazprom’s investments in the downstream. Still it is not absolutely quite clear how they will affect non-EU state-owned companies like Gazprom.

The reform doesn’t point directly at Russian companies. There is certain anxiety in the EU because some of the external energy suppliers have enough financial resources to buy out whole energy networks in Europe. And this reform is a kind of blocking measures which conflicts with the general liberal character of EU’s reforms. That’s protectionism!

Aleksandr Shokhin,
President, Russian Union of
Industrialists and Entrepreneurs

The Russian company itself says the proposal would, potentially, make gas prices rise.

The EU has also been talking to some other countries outside its borders, encouraging them to produce more ‘green energy’ and to lessen dependence on Russia. The organisation says it is trying to ensure a secure supply, but Russia insists that its supply has always been reliable.

It looks like these reforms will give Europe more clout when dealing with foreign energy suppliers like Gazprom. But all these developments come when the French are proposing a merger of two of their three biggest energy companies. So it seems that these new energy restrictions on who gets to supply Europe’s energy may have as much to do with politics as with competition, as the EU claims. 

The time frame for the proposals is quite lengthy.They still have got to go to the European Parliament and then to each individual member state. So whatever form they will take, the proposals won’t be put into place until 2009.