FT: Gazprom posturing masks Russia’s weakness
The $7bn bill Gazprom has hit Ukraine with for buying less gas than agreed last year might look like the Russian monopoly once again throwing its weight around. In fact, it highlights how much Gazprom’s business model – and with it, Russia’s energy dominance – is under threat.
The bill seemed purposely timed to arrive on the eve of Ukraine signing a groundbreaking deal with Royal Dutch Shell to exploit some of the country’s apparently extensive shale gas reserves. The Shell deal was Kiev’s most determined attempt yet to wriggle free of Gazprom’s grip on its energy supplies.
With Ukraine refusing to pay the bill, the spat seems set for at best an acrimonious arbitration, or at worst a third shut-off of Russian gas to Ukraine since 2006.
But Gazprom’s wrestling match with its biggest foreign customer encapsulates the broader legal and regulatory challenges, as well as the competitive threats, that it faces in Europe – by far its most profitable market. There are distinct overlaps here with the landmark antitrust probe the EU opened last year into Gazprom’s alleged abuses of its dominant position in EU member states from the former Soviet bloc. MORE
Further reading from Alan Riley: