Geopolitics

Gazprom, The Latest Stage For EU-Russia Hostility

As the European Commission targets Russian state-owned energy giant Gazprom for antitrust violations, tensions between Europe and Russia over Ukraine are only bound to rise.

Gazprom pipeline
Gazprom pipeline
Markus Balser

MUNICH — It is highly unlikely that Russia's government will leave the European Commission's antitrust attack upon state-owned energy giant Gazprom unanswered. The company's vast domestic and international influence — a far-reaching network of more than 400,000 employees, 160,000 kilometers of pipeline, and some 1,000 subsidiaries with a combined turnover of more than 100 billion euros — is simply too vital to Moscow's interest for the Kremlin to not rush to its defense.

After taking on Google, this is now the second time in two weeks that Brussels is going up against an internationally dominant company. And by doing so, it will probably increase tensions between the EU and Russia over the simmering conflict in Ukraine. After more than two-and-a-half years of investigation, EU Competition Commission inspector Margrethe Vestager announced last week that it's pursuing a case against Gazprom, accusing the energy giant with cozy ties to the Kremlin of violating fair-competition laws. The company could face a fine of up to 10% of its annual revenue.

"We hope that a compromise will be found," Kremlin spokesman Dmitry Peskov told journalists during a conference call last week. "We are looking forward to an absolutely impartial attitude towards the Gazprom company. Of course, Gazprom will defend its interests and the state, as a major shareholder in the company, will also defend the interests of Gazprom."

Though Vestager has said several times that her investigations are driven purely by economic motivations, she has also acknowledged the explosive nature of the situation. "This case is more political than others," she said.

Claiming that "Gazprom has abused its market power," she says the "unfairly high" prices charged in five countries — Estonia, Latvia, Lithuania, Poland and Bulgaria — are up to 40% higher than those of other countries within the EU. The reason for this, among others, is supposedly existing export bans. It's contractually illegal for major customers in eight Eastern European countries to export bought natural gas to other countries.

But in addition to the highly priced gas export, Vestager also criticizes the binding oil prices, which means that the price of natural gas is connected to that of oil.

Despite this, the EU is leaving no one in doubt about its goal to fight the market power of the Moscow-based energy empire with increased vigor. The case has been formally investigated since 2012, and three accusations are of major concern: Gazprom is alleged to have hindered the free flow of natural gas to certain countries and prevented a reduction of Europe's dependency on Russian natural gas resources. In addition to this, Gazprom is accused of having operated a dishonest pricing policy to the disadvantage of European consumers.

Getting closer to Greece

If it can be proven that Gazprom has violated European law, the ensuing punishment could be severe. The fine in such a case could reach 10 billion euros.

Brussels is acutely aware of the importance of this case. Gazprom is responsible for providing approximately one-third of Europe’s natural gas imports. It's obviously also significant to Russia itself.

The Brussels decision follows a demonstration of power by Moscow. After years of fraught building works, Gazprom decided to scrap the building of the South Stream pipeline to Western Europe entirely, and divert the natural gas to Turkey instead. This latest Gazprom attempt to edge closer to Greece was seen as an effort to split Europe along its natural gas necessity fault line, using energy policy as leverage.

Greek Energy Minister Panagiotis Lafazanis explained after a visit by Gazprom director Alexey Miller that the negotiations between Athens and Moscow regarding the Turkish-Stream pipeline project are at a solid stage. "We have had very constructive and stimulating conversations," Lazafanis said.

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Green

In Argentina, A Visit To World's Highest Solar Energy Park

With loans and solar panels from China, the massive solar park has been opened a year and is already powering the surrounding areas. Now the Chinese supplier is pushing for an expansion.

960,000 solar panels have been installed at the Cauchari park

Silvia Naishtat

CAUCHARI — Driving across the border with Chile into the northwest Argentine department of Susques, you may spot what looks like a black mass in the distance. Arriving at a 4,000-meter altitude in the municipality of Cauchari, what comes into view instead is an assembly of 960,000 solar panels. It is the world's highest photovoltaic (PV) park, which is also the second biggest solar energy facility in Latin America, after Mexico's Aguascalientes plant.

Spread over 800 hectares in an arid landscape, the Cauchari park has been operating for a year, and has so far turned sunshine into 315 megawatts of electricity, enough to power the local provincial capital of Jujuy through the national grid.


It has also generated some $50 million for the province, which Governor Gerardo Morales has allocated to building 239 schools.

Abundant sunshine, low temperatures

The physicist Martín Albornoz says Cauchari, which means "link to the sun," is exposed to the best solar radiation anywhere. The area has 260 days of sunshine, with no smog and relatively low temperatures, which helps keep the panels in optimal conditions.

Its construction began with a loan of more than $331 million from China's Eximbank, which allowed the purchase of panels made in Shanghai. They arrived in Buenos Aires in 2,500 containers and were later trucked a considerable distance to the site in Cauchari . This was a titanic project that required 1,200 builders and 10-ton cranes, but will save some 780,000 tons of CO2 emissions a year.

It is now run by 60 technicians. Its panels, with a 25-year guarantee, follow the sun's path and are cleaned twice a year. The plant is expected to have a service life of 40 years. Its choice of location was based on power lines traced in the 1990s to export power to Chile, now fed by the park.

Chinese engineers working in an office at the Cauchari park

Xinhua/ZUMA

Chinese want to expand

The plant belongs to the public-sector firm Jemse (Jujuy Energía y Minería), created in 2011 by the province's then governor Eduardo Fellner. Jemse's president, Felipe Albornoz, says that once Chinese credits are repaid in 20 years, Cauchari will earn the province $600 million.

The Argentine Energy ministry must now decide on the park's proposed expansion. The Chinese would pay in $200 million, which will help install 400,000 additional panels and generate enough power for the entire province of Jujuy.

The park's CEO, Guillermo Hoerth, observes that state policies are key to turning Jujuy into a green province. "We must change the production model. The world is rapidly cutting fossil fuel emissions. This is a great opportunity," Hoerth says.

The province's energy chief, Mario Pizarro, says in turn that Susques and three other provincial districts are already self-sufficient with clean energy, and three other districts would soon follow.

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