EU finds key to Gazprom contracts

Eurocommission will be reading all inter-governmental gas agreements

European Union keeps on the struggle for transparency of energy market. EU Council approved the resolution a year after voicing the scandalous demands to disclose oil and gas agreements made between certain countries. Not later than March, all EU members should submit all inter-governmental oil and gas agreements to European Commission (EC). Starting the new year, EC will be rightful to participate in all negotiations and assess legal compliance of new contracts. In general, this will little impact on market, but will create problems to certain suppliers. To Gazprom first of all, reports Kommersant.

EU Council adopted a mechanism of exchange of information about inter-governmental agreements in energy sector between EU members and third countries. The new legal act requires mandatory notification of EC about existing inter-governmental agreements. EC will then make these agreements open to other EU countries. Also, EC will take part in negotiations as an observer. Upon a request of an EU country, it will ensure compliance of newly made agreements to the European laws. 

The resolution will come into effect 20 days after publication in the EU official bulletin (expected for November). Then, EU members will be given three months to pass inter-governmental agreements to EC indicating any confidential issues the agreements may include. In case of signing new documents, countries will have to notify EC. If documents 'cause doubts', auditing may take nearly nine months. According to sources, this might extend and complicate negotiations between countries.

EU Commissioner Gunther Oettinger, the old opponent of Russia's monopoly in the European gas market, believes the new law is virtually the first step to enhance transparency of inter-governmental energy agreements. In his opinion, it will ensure legal certainty in making investment decisions, often backed up with inter-governmental agreements, and improve bargaining positions of EU members. About 90 agreements will be disclosed, reported EC (30 oil related and 60 gas related). 

For the first time, EC had voiced the necessity to disclose contractual terms in September 2011. Virtually, EU didn't make it secret that the initiative was targeted at the import of oil from Libya and gas from Russia. Not all supported the idea in the Europe - reportedly, Italy and Greece, that had won significant discounts from Gazprom, were against, as well as France.

Gazprom, supplying Europe with 150bn cubic meters of gas annually, never disclosed terms of agreements made with certain countries and specific price formation methods. 

WKT