Keenly awaited proposals from the European commission on liberalising Europe's energy sector, unveiled yesterday, put up a panoply of obstacles to energy predators outside the European Union. They could scupper Gazprom's ambitions to buy its way into the transmission systems for European Union consumers, and could compel the company to divest its sizeable stakes in energy companies from Latvia to Italy.
The draft directive from Brussels makes it virtually impossible for Gazprom to acquire a controlling stake in a gas transmission network in the EU. It proscribes any Gazprom investment at all in the networks unless the world's biggest gas supplier separates or "unbundles" its production and supply business from its transmission activities.
"If they want to buy a network, they have to prove they have nothing to do with the production and supply of gas," said a spokesman for the European Union energy commissioner, Andris Piebalgs.
Gazprom already has substantial stakes in energy transmission companies in Latvia, Lithuania, Poland, Germany and Italy and is regularly said to be eyeing further acquisitions.
"They either have to unbundle or sell their transmission networks," said the spokesman.
Jose Manuel Barroso, the commission chief, insisted the regulations and liberalising measures were aimed at creating a level playing field in the European energy sector and at heading off the threat of protectionist measures. Some European Union states, he said, wanted to ringfence their energy sectors for reasons of "national security".
"It's not against Russia - let's be clear," said Mr Barroso. "What we want is the internal market to work in a fair and open manner. We have to be attentive to companies that have a position of dominance that can create a problem of competition."
Gazprom, a state-owned monopoly, provides more than a quarter of Europe's gas. While Europe is increasingly dependent on Russian gas, Gazprom also relies heavily on Europe for its revenue.
Run by close allies of President Vladimir Putin, Gazprom has provoked alarm in Europe over the past two years by temporarily closing down the pipelines to western Europe via Belarus and Ukraine. It is often viewed as a Kremlin cudgel deployed as a blunt but effective instrument of Russian foreign policy.
The new rules, still to be endorsed by European Union member states and the European parliament before becoming European law perhaps in 2009, would not affect Gazprom's plans to invest in gas production and supply in the European Union.
The company responded guardedly to the commission proposals. It said it would carefully study the energy package. "Gazprom has an important contribution to make to the debate about regulation of the energy sector in Europe and feels certain that its voice will be heard," said Sergei Kupriyanov, a Gazprom spokesman.
The directive bans all Gazprom investment in European Union transmission networks unless it separates its production and supply business from the pipelines and other networks it controls. Even if it did "unbundle", Gazprom or other Russian entities that may be front companies would still be subject to "certification" by national and European Union-level energy regulators in Europe. Furthermore, Gazprom would still not be allowed to gain a controlling stake in a transmission network without agreement between Brussels and the Kremlin. The commission would be likely to use such negotiations to press for reciprocity and the lifting of curbs on European businesses in the Russian energy sector.
The new draft rules "are against the free-market spirit of the European Union", Alexander Shokhin, head of the main Russian business association, said yesterday. The proposals amounted "to state protectionism at the level of the European Union".
