Mark C. Partridge

The European Commission is considering barring foreign companies from owning a majority stake in member states’ gas pipelines and electricity power grids, a move directed against Russian gas monopoly Gazprom. The new proposal was part of a larger energy package that is aimed at liberalizing Europe’s energy markets.

Under the proposed legislation, companies will only be able to control pieces of these sensitive infrastructures if their home country has signed a reciprocal agreement with the Union, thus enabling European energy companies to enter markets such as Russia’s from which they are restricted.

Gazprom has been looking to invest in the EU’s downstream energy market. However, relations between Moscow and Brussels have soured of late. Buoyed by ballooning energy prices, Russia has exerted its authority on a range of issues, most recently opposing Kosovo’s independence and foiling Western efforts to impose stronger sanctions on Iran.

The gas giant has become a useful tool for the Kremlin in recent years, exerting pressure on neighboring countries, such as Ukraine and Belarus. The company has strong links to the Kremlin with its chairman, Dmitry Medvedev, currently serving as one of President Vladimir Putin’s deputy prime ministers and a potential successor.

Despite this setback, Gazprom has established a dominant position in Europe, supplying 24% of the Continent’s natural gas. Furthermore, Russia has made moves to coordinate gas supply with other major EU gas suppliers like Algeria through the Gas Exporting Countries’ Forum.

Russia’s power in the European gas market has also been strengthened by Western companies’ failings in their own projects (subscription needed), most notably in the Caspian.