EU’s Third Energy Package aims to reduce gas prices for Europe

The implementation of the Third Energy Package by the European Union is an attempt to reduce the gas import price for Europe and change the existing gas pricing formula that is dependent on oil prices, Russian Prime Minister Vladimir Putin said on Monday.

In an interview with the heads of Russia’s three state-run TV channels, Putin said that the EU-backed energy package that aims to separate production and supply from transmission networks is tailored in “a unilateral order” that seeks “to reduce the [gas] price, to destroy the market pricing formula that depends on the oil price.”

The third package of legislative proposals for Europe’s electricity and gas markets has the goal of separating production and supply from transmission networks, facilitate cross-border trade in energy and promote cross-border collaboration and investment as well as greater market transparency on network operation and supply.

Russia has repeatedly spoken out against the Third Energy Package, claiming that it particularly affects the operation of vertically integrated companies such as the state-controlled gas monopoly Gazprom which produces and supplies gas.

“It [the third package] is not really a very longsighted approach, because… today oil is selling at a decent price, but tomorrow it may fall, so Gazprom will endure losses and those who buy gas will, on the contrary, win,” Putin said, adding that the implementation of the Third Energy Package “is unsubstantiated.”

Last week President Dmitry Medvedev said that the Third Energy Package caused problems for Russia’s cooperation with Europe and Russia would have to take retaliatory measures.

In order to reduce gas prices for Europe, Putin proposed letting in Gazprom directly to Europe’s final consumers and removing European intermediaries that “buy our gas, then supply it to their own energy stations and receive the profit margin on the first stage.”

“Let Gazprom directly supply gas to the energy stations, so there will be neither an intermediary nor an additional price margin, the price of the product will fall,” the premier said.


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