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Brussels, 17th February 2005

Competition: Commission secures improvements to gas supply contracts between OMV and Gazprom

In the light of improvements made to the gas supply contracts between Austrian oil and gas company OMV and Russian gas producer Gazprom to remove clauses that infringed EC Treaty rules on restrictive business practices (Article 81), the European Commission has decided to close its investigation. In particular, OMV will no longer be prevented from reselling, outside Austria, the gas it buys from Gazprom, and Gazprom will be free to sell to other customers in Austria without having to first offer the gas to OMV. OMV also agreed to contribute to increasing capacity on the pipeline that transports Russian gas, through Austria, to Italy, a similar outcome to the one reached with the Italian oil and gas company ENI in October 2003 (see IP/03/1345). The case demonstrates the Commission’s resolve to act against market partitioning agreements or any other potentially anti-competitive arrangements that hamper the true liberalisation of the energy sector.

Competition Commissioner Neelie Kroes commented, “This outcome will contribute to the integration of the European gas market and bring benefits to energy consumers. I intend to use our competition tools actively to speed up the liberalisation process in gas and electricity markets.”

Removing the restrictions in the OMV/Gazprom contracts is a considerable achievement in the Commission’s fight to introduce competition into this sector: first, because the vast majority of Austrian gas imports stem from Russia and, second, because Austria is a key transit route for Russian gas towards the major German, French and Italian gas markets. Gazprom is Europe’s largest external gas supplier.

The companies agreed to delete the territorial sales restrictions from their existing gas supply contracts and to delete contractual provisions that oblige Gazprom to offer any gas, due for Austria, first to OMV (so-called right of first refusal).

OMV, in its capacity of shareholder of the Trans Austria Gasleitung (TAG) pipeline, also undertook to promote an increase of capacity in that pipeline, which runs through Austria and transports Russian gas to the Italian market. Finally, it offered to promote improved third party access (TPA) on this TAG pipeline based on the Guidelines for Good Practice developed by the European Commission, European Regulators and the European gas industry in the context of the Madrid Forum. The latter commitments are similar to the ones offered to the Commission by Italian oil and gas company ENI, the other shareholder of the TAG pipeline, in October 2003.

The Commission has also been investigating the compatibility with EC Treaty competition rules of territorial restrictions and mechanisms having similar effects, in supply contracts between Russian company Gazprom, Algerian company Sonatrach and a number of their respective European customers since 2001.

These practices prevent wholesalers from reselling the gas into neighbouring territories. This constitutes a severe restriction of competition because such wholesaling could significantly contribute to the creation of a more integrated European gas market, fostering both competition and security of supply.

These investigations continue, notably as concerns imports of Russian gas by one German wholesaler and imports of Algerian gas by Italian and Spanish operators.

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