EU forces Italian gas giant to loosen grip on import pipelines

Sep 29, 2010, 12:26 GMT

Brussels - The European Union on Wednesday forced Italy's incumbent energy company, ENI, to let go of its shares in three pipelines transporting gas from Russia and Northern Europe, in a bid to open up the market to competitors.

The European Commission, the EU's executive, has long battled to open up energy markets to more competition, in the face of stiff resistance from former monopolies. ENI's agreement to sell off its share in the pipelines represents a major success for the Brussels- based commission.

A legally-binding pledge by ENI to sell its shares in the pipelines 'will ensure that capacity hoarding and degradation will no longer take place on the transport pipelines into Italy and the proper investment incentives will prevail,' EU Competition Commissioner Joaquin Almunia said in a statement.

The deal also means that the commission will drop a threat to take ENI to court, a process which could have resulted in the company facing fines of hundreds of millions of euros.

The commission had suspected that ENI was using its control of the pipelines to make sure that rival companies could not offer their own gas for sale in Italy.

Under the agreement, the state-controlled ENI is bound to sell off its shares in the TENP pipeline, which brings gas to Italy from the Netherlands across Germany, and the Transitgas pipeline, linking Italy with the French gas network through Switzerland.

However, a compromise was reached over the Russian-gas bearing TAG pipeline, which the Italian government insisted should remain in public hands for reasons of national interest.

Ownership of the pipeline is set to move into the hands of a company directly controlled by the Italian treasury, the Cassa Depositi e Prestiti, pending sale to a company approved by both the Italian government and the commission.