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Buying Smarter
Gazprom Warns Against Proposed European Energy Union

As the European Union moves ahead with an anti-trust case against Gazprom, the Russian firm is pushing back by warning that a unified pricing model will mean higher costs for the continent. The FT reports:

[Gazprom CEO Alexei Miller] defended the company’s pricing model and explained that prices differed because Europe was a “fragmented market” where the energy mix varied sharply by country.

“We do not understand why we are blamed for setting different prices,” he said. “If the European Commission will insist on equal prices, the common price is not the lowest price, it will most obviously be the highest price.”

This is, of course, divide and conquer strategy at its most conspicuous. Russia has long benefitted from a piecemeal approach to its European customers which gives it leverage to cozy up to certain states with darling contracts (as is the case with its relationship with Germany) or punish others it sees as working against it (Ukraine being the best example there).

If the European Commission gains the ability to oversee Gazprom’s contracts, the EU will be in a far stronger negotiating position. That has to be of great concern to Moscow, which has used its prodigious energy supplies as an effective strategic tool in its dealings with the West.

Putin is already actively working to undermine these efforts to form an energy union, having already recruited Hungary’s Viktor Orban to scupper the plan. It won’t be easy, but the formation of this energy union ought to be a top priority for Brussels.

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  • Kevin

    Putin is playing a weak hand well, in part because the stakes for the Europeans seemed low so they couldn’t be bothered to react effectively. However, his overreaching is causing the Europeans to begin to wake up and pay attention

  • Proud Skeptic

    Large scale negotiation of purchases is reputedly one of the strengths of the countries who use nationalized healthcare. The bigger the customer, be it for gas or meds, the bigger the clout.

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