The European Commission last week cautioned producers on the Norwegian Continental Shelf that the joint sale of gas through the soon-to-be-disbanded Gas Negotiation Committee (GFU) falls afoul of the European Union competition rules on the ground that it fixes price and volumes sold.
Operators on the NCS, including Norsk Hydro AS, immediately contested the EC's "statement of objections," saying the EU had "no foundation for competition action" against the companies producing gas in the province.
EC last week sent the statement to Norwegian state-owned oil and gas company Statoil AS, as well as Hydro-both members of GFU-warning of their alleged transgression of EU competition law. GFU negotiates natural gas sales contracts with buyers on behalf of all the other gas producers in Norway, thereby fixing the "selling price, volumes, and all other trading conditions."
Dispute details
Hydro said the statement of objections was the "beginning of a process" and laid the groundwork for further action. The companies have 3 months to respond to the complaint.
According to EC, GFU companies, which included Saga Petroleum AS until it was merged into Statoil and Hydro last year, "must put an end to the joint selling of gas from Norway and eliminate the restrictive effects residing in the contracts concluded with third parties under the joint selling scheme."
GFU has a number of long-standing, long-term gas supply contracts with various European operators.
"As the European gas market is progressively being liberalized, it is of paramount importance that producers sell their gas individually, so that those customers that can already choose their supplier benefit from real choice and competitive prices," EC said.
EC welcomed the Norwegian government's recent decision to close the GFU, a move that will take full effect Jan. 1, 2002, as "a step in the right direction" but noted that the abolition is not yet final. GFU was suspended June 1 (OGJ Online, May 30, 2001).
"The commission's proceedings concern the behavior of Norwegian gas producers; its proceedings will continue until measures taken by the Norwegian government have been implemented by the companies in question and all objections of the commission remedied," EC said.
The commission does not rule out issuing a statement of objections to other Norwegian gas producers in the context of the GFU case in the near future.
Norwegian authorities discontinued GFU activities in the European Economic Area as of June 1, until the Storting-the country's parliament-could clear plans to permanently abolish the committee.
