Foreign bidders likely to face restrictions in EU energy market

Brussels is planning to prevent foreign companies from having "uncontrolled access" to the European energy sector in a bid to alleviate the fears of EU capitals opposing the separation of supply and distribution channels in energy companies, known as unbundling.

According to a European Commission internal paper, cited by the Financial Times, non-European energy firms are likely to face a number of restrictive measures, which would significantly curb their ambitions to expand in Europe and own assets and equity shares in the bloc's companies.

Under one scenario, Brussels would be granted the right to thoroughly examine any potential investor before allowing him to take control of a European firm.

The toughest measure, however, suggests declaring the European energy sector "a strategic industry" that would be protected from most non-EU countries bidders.

A reciprocity clause could apply – something likely to hit resource-rich countries such as Russia or Saudi Arabia where European companies also face severe limits on investment.

The protective measures are linked to the European Commission's aim to force EU energy giants to give up control of their distribution networks, known as unbundling.

According to Brussels, the idea is key to introducing competition to the area, as control of both supply and distribution makes it harder for new entrants to enter into the market.

However, many EU states reject full separation of energy assets, pointing to the risk of EU companies falling under the control of non-European firms.

An internal commission document, seen by FT Deutschland, also admits the 27-nation bloc could become "vulnerable to a strategy of third countries to dominate the EU markets not only in terms of supply, but also by acquiring the networks".

The paper goes on to warn about situations "where investment is driven by other motives than economic ones".

The energy package – seen as Brussels' furthest-reaching intervention in the sector yet – is to be presented by the EU's executive body on 19 September.