Gazprom Export May Appeal Against RWE Decision, Russia

Gazprom Export Comments on Outcome of Arbitration with RWE Transgas

The Gazprom Group considers possibilities to appeal against the decision made by the arbitration court in Vienna that refers to the fulfillment of the take-or-pay clauses of the contract for gas supply to Czech Republic, concluded earlier with the RWE Transgas. In this connection the company will take it as necessary to appeal at the Supreme Court of Austria for cancellation of this decision.

The company’s position is explained by the fact that the clauses of Addendum to the contract that were recognized valid by the arbitration, starting from the moment when Czech Republic joined the EU, are in controversy to the European competition law, namely Article 101 of the Treaty.

In course of commercial negotiations the company have been repeatedly approaching RWE Transgas to annul this controversial addendum because of its non compliance to the European norms. It was the RWE’s denial to do that that served as reason for arbitration.

The arbitration has declared valid the part of Addendum 1 to gas supply contract between RWE Transgas and Gazprom export. This part of addendum says that the Czech subsidiary of the German concern can reduce its obligations for gas offtake (take-or-pay) for the same amounts that the Gazprom Group directly supplies to the Czech market.

At the same time, the symmetrical part of the same Addendum was declared non-valid. This part stated that Gazprom had the right to increase the obligations of RWE Transgas, on the amounts that RWE supplies outside of Czech Republic to the markets where Gazprom Group is working as well. The unvalidity of the latter part was never doubted by either party.

The decision taken by the arbitration that allows the European company – a monopoly player on the Czech market – to retain its monopoly position in the country through the contract validity, thus restricting competition in the EU market, gains additional poignancy in the context of recent inquiries of the European Commission. The EC closely studies all the Gazprom Group activity on the EU markets for its compliance with the EU competition law, accusing the Group of abusing its dominant position. At the same time, the arbitration leaves valid a contract clause that breaks the imperative regulations of the EU and creates opportunities to restrict competition.

LNG World News Staff, October 26, 2012; Image: Gazprom

 

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