Kremlin houdt zich gedeisd in EU-Gazprom conflict (en)

BRUSSELS - The Kremlin has started putting pressure on the EU i for a friendly "settlement" on Gazprom one day after the European Commission said the affair is a purely commercial matter.

Speaking in an interview with the Wall Street Journal on Thursday (8 September), Russia's EU ambassador, Vladimir Chizhov said: "We always favour negotiated solutions because nobody wants a gas war."

He added that if Gazprom "reaches some kind of agreement, be it with the commission, or be it with member states, or be it with European energy companies ... I would only welcome it."

Echoing Gazprom's press statement earlier in the week, which indicated that the firm is too big a deal for EU officials to handle because it is a "strategic organisation, administered by the [Russian] government," Chizhov poked fun at Brussels' regulatory ambitions: "The European Commission can look into anything it wants: whether there is life on Mars or whether there are some irregularities in Google or Gazprom or Microsoft."

He also described the anti-trust probe as an "irritant" in the EU-Russia "strategic partnership."

For his part, Russian President Vladimir Putin i's spokesman, Dmitry Peskov, also on Thursday told Reuters at a conference in Vladivostock: "There is no talk about retaliation measures. Gazprom has in the course of many decades proven its reliability as natural gas supplier and is in fact a guarantor of the energy security in Europe."

The assurances on gas wars highlight Russia's track record of using Gazprom to settle political disputes with neighbours.

The Kremlin in 2009 cut off gas to Ukraine in a price war designed to undermine its Orange Revolution leaders, causing blackouts in EU countries, such as Bulgaria, which depend on gas transit through Ukraine.

In contrast to Peskov's line, commission President Jose Manuel Barroso i at the time described Russia as a banana republic.

"I've been involved in mediation processes since I was young, including in African matters. It's the first time I saw agreements that were systematically not respected ...Gas coming from Russia is not secure," he said.

The commission probe, which could end in a 10 percent fine of Gazprom's income in eight EU countries, saw its shares drop by almost 2 percent this week.

It is the latest in a line of blows to the country's energy champion.

Gazprom last week said it has to stop development of the Shtokman gas field in the Barents Sea due to high costs.

On Thursday, it said it has to refund European customers €1.9 billion for the first quarter of this year because of unduly high prices in long term contracts.

Its first quarter profits are down 24 percent year-on-year and its shares are trading at over 60 percent less than in 2008 due to lower demand and global diversification into shale gas and liquid gas.

The Kremlin's use of the firm as a political instrument has also cost it dearly.

Gazprom lost billions in the 2009 war with Ukraine. Its investment in underwater pipelines - Nord Stream and South Stream - designed to maintain its Cold-War-era sphere of influence in eastern Europe overlooks cheaper land-based options. It also hemorrhages money in discounts aimed at keeping Belarus dictator Alexander Lukashenko on side.

Meanwhile, amid Chizhov's gentle mockery of EU probes into "life on Mars," EU officials and diplomats are themselves indulging in a bit of schadenfreude.

One email doing the rounds in EU institutions makes fun of a tune by Vladimir Tumayev, the head of Gazprom subsidiary Spetsgazavtotrans.

"Let's drink to you. Let's drink to us. Let's drink to all the Russian gas ... That it never comes to an end," the cheesy song goes.