GO
Loading...

Putin says Europe should cut gas taxes, not seek price cuts

* Putin hints Europe's gas taxes too high

* Says Russian firms should not lose income

MOSCOW, Oct 2 (Reuters) - Europe should cut taxes levied on gas deliveries rather than ask Russia's gas export monopoly to cut its prices, Russian President Vladimir Putin said on Tuesday.

Putin's Kremlin has responded to increased European Commission scrutiny of Gazprom's export pricing with an order requiring "strategic" companies to obtain permission to alter contracts and disclose information to foreign regulators.

"As regards possible price cuts for end-users, including in European countries, I would recommend that you look at the price structure. Look at the tax element. The end user pays a price that is 60 percent taxes," Putin said.

"Why do our partners want us to reduce our companies' income, while they leave this tax component unchanged? I understand they want it, because money is collected through taxes to resolve social aims."

The commission launched a formal investigation into Gazprom's European businesses after raids carried out at its European units' and partners' offices a year ago.

Gazprom, which covers over a quarter of Europe's gas needs by shipping around 150 billion cubic metres a year to the EU, may face heavy fines.

Gazprom sees the average 2012 gas price for the EU at between $405 and $415 per 1,000 cubic metres, up from $390 in 2011.

Last year, Gazprom sold gas to Europe and other countries outside the former Soviet Union worth $55 billion. The revenues are expected to be lower this year after it offered the price cuts on long-term gas supplies after pressure from customers.

The company cut prices under its long-term contracts - the backbone of the company's relation with many of its clients - to respond to the calls from the European consumers, whose profits have been squeezed due to high Russian gas prices.

Gazprom will repay about 1 billion euros ($1.28 billion) more to its European clients by the end of the year as part of an agreement to cut gas prices, after it returned them more than 78 billion roubles ($2.51 billion)in the first quarter.

But the company has unresolved issues with several other of its customers, including Lithuania, the Czech subsidiary of RWE , and Poland's PGNiG .

Putin responded to the EU investigation into Gazprom's business, by tightening state control over "strategic" companies operating outside Russia, ordering them to obtain government approval to disclose information to foreign regulators, alter contracts or sell property abroad.

The Russian president also reiterated Moscow's negative stance on Europe's Third Energy Package, which restricts Gazprom's control over its European pipeline assets.

"If transport is spun off, than the transportation component will just die," Putin said. "As a rule the transportation component is of no interest, but under the Third Energy Package it is separated."

($1 = 31.0372 Russian roubles)

(Reporting by Vladimir Soldatkin; editing by Keiron Henderson)

((vladimir.soldatkin@thomsonreuters.com)(+7 495 775 12 42)(Reuters Messaging: vladimir.soldatkin.thomsonreuters.com@reuters.net))

Keywords: RUSSIA GAS/EUROPE