WordBulletin

World Bulletin / News Desk

Russia's Gazprom will repay about 1 billion euros ($1.28 billion) to its European clients by the end of the year as part of an agreement to cut gas prices, a company official said on Monday.

The state-run gas producer had agreed to tweak long-term deals with key European customers who claimed that its prices were too high and it returned more than 78 billion roubles ($2.43 billion) in the first quarter.

The repayments failed to stop the European Commision from launching an investigation into Gazprom last week. The Commission is to look at suspected anti-competitive practices in central and eastern Europe and could issue fines of up to $5 billion.

Deputy Chief Executive Alexander Medvedev told a conference call on Monday that the new payments would be "significantly lower" than in the first quarter and would total about 1 billion euros, "plus or minus 10 to 15 percent".

The bulk of this will go to German utility E.ON.

The European Commission's action continues what has been a tense relationship between the European Union and Moscow over energy policy as European governments seek new sources for their gas.

Lithuania and the Czech subsidiary of RWE, Germany's second-biggest utility company, had both been trying to negotiate better deals on their gas from Russia, while Poland's PGNiG went as far as bringing Gazprom into an arbitration court.

Gazprom last week reported a 24 percent fall in first-quarter net profits because of its repayments so far and said that it was ready to cooperate with the European Commission investigation.

Medvedev added that he will soon meet a deputy competition commissioner to discuss the investigation face to face. ($1 = 0.7812 euros)