EU may terminate long-term contracts with Gazprom


The EU Court might receive powers to cancel agreements of EU member states with third countries regarding energy supply, including gas supply contracts with Russia.

As a part of a set of measures to ensure the energy security, the European Commission (EC) has put forward a corresponding proposal, reports RIA Novosti news agency citing a source in Brussels.

According to the EC plan, agreements violating EU legislation – including the rules of transparency and competition – are subject to cancellation.

“(Currently) The Commission can not cancel the contract in case of violations of the law, this decision can only be made by the European Court of Justice”, – explained a source in the EU institutions.

Thus, the Commission is preparing a legal ground for revision of the existing agreements in the EU system for gas supply – currently they are made by individual countries without disclosing the price, or other conditions, and not controlled by Brussels.

Earlier this year, the European Commission has prepared a set of laws that eliminate the deficit in gas supplies.

Draft amendments to the EU legislation will restrict member states from making inter-governmental agreements for energy supply without the approval of the EC. A separate item in the documents introduces the obligation of countries to fully report on gas commercial contracts covering more than 40% of the local market. Only Gazprom’s contracts with the countries of Central and Eastern Europe match this criteria.

The idea is that all non-European gas suppliers will have to inform the regulator about the parameters of long-term contracts “to assess their impact on energy security”.

This legislative innovation is obviously aimed at clarifying details of inter-governmental agreements and, therefore, long-term contracts with Gazprom, explain analysts of UFS IC.

“At least, Gazprom can be forced to review a number of contracts, reducing the already low margins. In the worst case we can expect the next stage of anti-trust proceedings and fines. These new regulations can completely discredit the whole system of long-term contracts”, – said in the commentary of UFS IC.