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Ukrainian gas supplier accuses Gazprom of market abuse

European gas prices hit a record high of €181 per megawatt-hour on Tuesday when a pipeline through Belarus bringing in Russian gas to Germany switched part of its flow east, adding to supply fears

Ukrainian gas supplier accuses Gazprom of market abuse

Kiev, December 24 - Neftegaz.RU. Naftogaz, the largest natural gas company in Ukraine, filed a complaint with the EU competition watchdog against Russia's Gazprom on Wednesday (22 December), EUobserver has reported.
The Ukrainian company accuses Gazprom of abusing its dominant position in the European gas market.

Naftogaz CEO Yuriy Vitrenko said in a statement:
  • Gazprom has sharply reduced its delivery of natural gas to the European spot market, despite growing market demand
According to the complaint Gazprom has stopped selling gas through its electronic platform and is also blocking sales from other private suppliers.
Vitrenko said:
  • Gazprom is preventing other companies from supplying additional gas to Europe and competing with Gazprom
  • This is one of the key causes of the crisis contributing to record-high gas prices in Europe
Gazprom has also declined using Ukrainian pipeline capacity to supply larger volumes, despite a 50 % discount offer by Kiev.
Naftogaz has now called on the commission to order Gazprom to increase its gas sales.

Responding to the letter of Naftogaz, a spokesperson for the commission has said it would assess the complaint under its standard procedures but did not go into further detail.

Moscow said that its domestic market is a higher priority right now due to freezing temperatures.
But Naftogaz alleges Gazprom used its market power to force through Nord Stream 2 - the pipeline directly connecting Germany and Russia - at the cost of Ukraine's gas operator.

Kremlin spokesman Dmitry Peskov denied this on Tuesday and said:
  • There is absolutely no connection [with Nord Stream 2], this is a purely commercial situation
High gas prices in Europe have caused ships carrying LNG destined for China to change course to the Atlantic, but these are unlikely to solve storage issues in the bloc.

France, Italy, Spain, Poland all have regulations ensuring gas storage facilities are well-filled at the beginning of the winter.
But the Netherlands, Germany and Austria do not, and now have lower than usual storage levels, making them more dependent on gas imports.

Nuclear outages in France added to the energy concerns in Europe this week.
Due to maintenance, about 1/3 of France's nuclear capacity will be suspended in January, forcing the government - which generally exports electricity to adjacent countries - to import gas.

And with Germany planning to close 3 of its 6 last remaining nuclear power plants before the end of the year, gas deliveries from Russia look even more crucial in the coming winter months.
When pressed to respond to the gas crunch, EU commissioner for competition Margrethe Vestager told press on Tuesday the EU needs to accelerate investments in renewables:
  • We need to phase out our reliance on fossil fuels and that includes gas
  • The faster we get to renewables, the less exposed we are to price spikes coming from imported fossil fuels
She also said the commission had asked major energy companies, including Gazprom, «if there is foul play in the energy market.»
She did not go into further details.

Author: Wester van Gaal


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