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29th Mar 2020

EU and Germany in talks on future of Russian pipeline

  • Gerhard Schroeder, a former German chancellor who went to work for Gazprom, signs a Nord Stream II pipe (Photo: nord-stream2.com)

The European Commission has said that energy laws should apply to offshore as well as onshore parts of Russia's new gas pipeline, Nord Stream 2 .

Maros Sefcovic, the EU energy commissioner, told a group of reporters in Brussels on Monday (13 March) that he was in talks with the German energy regulator, the Bundesnetzagentur, on the issue.

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  • Sefcovic: "We have to avoid a legal void" (Photo: European Commission)

“The commission’s approach is that once this offshore pipeline reaches exclusive zones and territorial waters of the European Union, it’s quite clear that the core principles of EU law should be applied,” he said.

He said the core principles were “unbundling, tariff setting, capacity allocation, third-party access”.

“We have to avoid a legal void or the situation where the whole offshore part of the pipeline would be built just according to Russian law,” he said.

The Nord Stream 2 pipeline is to run from Russia to Germany, concentrating almost all of Russia’s EU gas exports in that route.

It will also pass through the economic zones or territorial waters of Finland, Sweden, and Denmark.

Its critics, chief among them Poland, say it would help Russia to use gas cut-offs as an instrument of political blackmail in central Europe and that it would harm Ukraine by making its gas transit pipes obsolete.

Russia has said that only onshore parts of Nord Stream 2 should be governed by EU laws.

It abhors those laws, which led to the cancellation of a similar project in the Black Sea, because they would force Gazprom, the Russian state firm that owns the pipeline, to split up or “unbundle” its assets and to let competing firms use the infrastructure.

Sefcovic said Germany and Russia did not plan to sign an intergovernmental pact on the project, which would have given EU officials some oversight powers.

He said they planned to build the multi-billion euro scheme using a “special purpose vehicle” instead.

He said he had asked Germany to “develop” a legal structure that would honour the EU core principles.

The Nord Stream 2 consortium, a firm based in the Swiss tax haven of Zug, originally involved five EU firms, but these withdrew after a complaint from Poland, leaving Gazprom on its own.

It says it is on track to have bought 480km of pipes by the end of March and recently hired Allseas, a Swiss contractor, to start laying them.

Poland, the Baltic states, and Nordic countries have asked the commission to issue an opinion on the compatibility of Nord Stream 2 with EU law.

But Sefcovic has declined to do that, saying it was not the commission’s job to pre-evaluate private projects and that it would be hard in any case because the Nord Stream 2 legal models kept changing.

He said on Monday that the EU was pressing ahead with plans to “make sure” that Caspian Sea gas from Azerbaijan “reaches the EU by 2020”.

He also said the EU was becoming less dependent on Russia by building liquid natural gas (LNG) terminals.

He said his US counterparts, on a recent visit to Washington, had told him US suppliers were keen to ship more liquid gas to Europe.

He also said LNG investments, which are more expensive than pipeline gas, would bring down gas prices in the long term by making it into a global commodity such as oil.

“It would make it possible for Europeans to choose from many global suppliers,” he said.

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