Russ Oil-Gas

June 19, 2008 - Kommersant - The latest obstacle on Russia’s long road to World Trade Organization membership has been put there by Germany, which raised the question of Gazprom’s status as a state trade organization with a trading policy that should be regulated by the WTO. The law limiting foreign investment in strategic sectors in Russia, which came into force last month, also elicited a howl of protest. It had not been translated into English. European Trade Commissioner Peter Mandelson will discuss Russian duties on timber in Moscow today. Russia does not intend to make concessions. Alexey Portansky, head of the information bureau for Russia’s accession to the WTO, commented for Kommersant, “As for Gazprom, the question is not likely to be as pressing for Europe. That is more a question for Saudi Arabia and the United States. Gas supply is the only thing that might be of interest to Germany, but the status of the enterprise is not within the sphere of Germany’s competence!” The discussion of Gazprom is not welcome news for Russia. Russia does not acknowledge Gazprom as a state trading organization, even though it is legislatively defined as the monopoly natural gas exporter. “State trading organizations” are regulated by the so-called GATT 1994 agreement, which makes export prices and subsidies subject to WTO negotiations. It also requires that such organizations make imports and exports exclusively on a commercial basis. The new format for cooperation between Gazprom and German energy giant E.On will be announced today, while Mandelson is in Moscow. It is possible that the discussion of Gazprom in the WTO context was part of the trading over that new format. Observers say the discussion of Gazprom could last for some time.