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Stop pulling your punches on Gazprom, Ukrainian gas boss tells EU

Stop pulling your punches on Gazprom, Ukrainian gas boss tells EU

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It’s high time for the EU to stop shying away from an overdue legal showdown with Moscow’s gas export monopoly and to shift its energy investments away from Russia, the chief executive of Ukraine’s national gas company Yuriy Vitrenko told POLITICO.

Europe’s reliance on Russian gas is one of the most sensitive dimensions to the spiraling security crisis sparked by Russian President Vladimir Putin’s invasion of eastern Ukraine. In fact, EU dependence on Gazprom’s pipelines is only growing. In 2021, more than 42 percent of total EU gas imports came from Russia, up from 26 percent in 2010. 

Rather than simply trying to carry on as if nothing had happened — gas flows are not affected by EU sanctions — Naftogaz CEO Vitrenko argued that it was time to penalize Gazprom for antitrust abuses.

The European Commission said in October it was collecting evidence for a probe into whether illegal, anti-competitive activity by Gazprom was helping drive EU gas prices to eye-watering highs. Antitrust regulation is one of the few areas where Brussels has major powers to police corporate behavior — and it did force changes from Gazprom in a high-profile case that ran from 2012 to 2018.

Vitrenko, a former Ukrainian energy minister, said Brussels needed to throw the book at Gazprom again. “It’s really, really strange that Europe is not using its antitrust legislation and mechanisms because it’s clear that Gazprom is abusing its dominance in the European market,” he said. “They have adequate tools to make Gazprom sell more gas to Europe,” he said, speaking via video link from Naftogaz’s headquarters in Kyiv.

Vitrenko made no attempt to disguise his hopes that Ukraine would be a leading beneficiary of any EU switch away from Russian gas. He took Western leaders to task for their reluctance to sanction Russia’s energy sector and for failing to invest in gas development in Ukraine instead.

“There should clearly be an embargo on selling to Russia equipment and services for new upstream projects … [and] on financing upstream projects in Russia, while there should be facilitation of such upstream investments in projects in countries like Ukraine,” he argued. “We can produce more gas, much more, but then we would need modern technologies, managerial know-how and capital. And currently, unfortunately, because of Putin, but also because of Western reactions to Putin’s aggressions, we have problems with that,” he added.

In regard to the U.S. influence over Gazprom, Vitrenko said it was “paramount” that President Joe Biden should stop using his executive power to waive sanctions passed by lawmakers against the Nord Stream 2 natural gas pipeline running from Russia to Germany and its executives.

The company behind the scheme, Nord Stream 2 AG, is owned by Gazprom.

“It’s morally and politically important the U.S. shows that they are fighting, that they are confronting Putin’s regime,” he said.

Sanctioning the company could well force five major Western energy firms — France’s Engie, German-Finnish Uniper, Austria’s OMV, the Dutch-British Shell, and Germany’s Wintershall — to unwind loans they made to Nord Stream 2 AG, totaling half the cost of the €10 billion pipeline.

But in doing so, Vitrenko reasoned, “we would lose, for the common good, these lobbyists of Gazprom in the EU and the U.S. … who are promoting and advocating for Nord Stream 2.”

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