Monday

19th Aug 2019

Legal tweak could extend EU control on Russia pipeline

  • Pipeline to be operational by 2019 (Photo: Nord Stream)

The European Commission is preparing to amend EU energy law in order to rein in Russian plans for a new gas pipeline.

An EU source said the Commission could propose the amendment to its 2009 law on gas markets in early November.

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The change would redefine "interconnector" pipelines so that EU anti-monopoly laws, the so-called third energy package, applied in full to Nord Stream 2, Russia's new gas conduit to Germany.

The initiative comes amid mounting concern in Brussels and other EU capitals that the project would harm EU energy security by concentrating Russian supplies in one route.

Polish prime minister Beata Szydlo urged the Commission to take action at the summit in Brussels on Thursday.

The leaders of Austria, Denmark, Latvia, and Lithuania, as well as European Commission head Jean-Claude Juncker and European Council chief Donald Tusk also spoke out in favour of strong EU regulation of Nord Stream 2, the EU source said.

The intervention by the Austrian chancellor, Christian Kern, who said the EU should diversify energy sources for the sake of lower prices, came as a surprise because Austrian energy firm OMV is planning to invest €950 million in Nord Stream 2.

Thursday's debate came in the context of two opposing legal opinions on Nord Stream 2 - from the Commission's lawyers and from the Council services.

The Commission lawyers said the third energy package should apply to the offshore section of Nord Stream 2 and that Commission officials should negotiate the legal model for the pipeline with Russia on behalf of the EU.

The Council said the EU had no jurisdiction and the Commission had no mandate for negotiations.

The EU source said German chancellor Angela Merkel also spoke out on Thursday.

She reportedly acknowledged Szydlo's point that Nord Stream 2 had a "political dimension", but she said she was against a Commission mandate for Russia talks.

Speaking to press after the Council debate, Juncker said "quite a number" of member states wanted EU-level intervention on the pipeline.

But he said "I don't feel we'll have unanimity" on giving the Commission a mandate to negotiate with Russia on behalf of the EU.

Szydlo told press: "I am pleased to say that my voice in the discussion was supported by other heads of governments, and the importance of this topic was supported by chairman Donald Tusk".

Lithuanian president Dalia Grybauskaite told media on Friday morning there was a legal "battle" between EU Council and Commission lawyers on which rules applied to Nord Stream 2 gas pipeline, which she described as a "geopolitical" issue.

"That's why it's very much important to adapt the third energy package … and have clarity in future how to deal with third countries," she said.

The third energy package would force Russian firm Gazprom to run its pipeline via an independent operator and to let competing energy firms use the infrastructure.

Similar EU provisions led Russia to abandon a gas pipeline to Bulgaria under the Black Sea three years ago.

If Nord Stream 2 is built, 70 percent of all Russian gas imports to Europe would go via Germany, enabling Russia to cut off Baltic states or Poland for political reasons.

If it is built, it would also make Ukraine's gas transit network obsolete in a hammer blow to its economy at a time when it is trying to align with the West.

Analysis

EU purchase of US gas serves dual purpose

The EU wants to diversify the sources where it gets its natural gas from - while importing more liquefied natural gas (LNG) from the US could also slightly appease Donald Trump.

Investigation

EU's claim Energy Union now 'a reality' not based on facts

The Juncker commission this week awarded it self top marks on the Energy Union, declaring it "completed". But a detailed analysis reveals the commission quietly stopped reporting on key indicators that would have shown the actual level of progress.

Planned German coal exit boosts case for Nord Stream 2

German commission recommends phasing out coal power over the next 19 years - which will provide additional arguments to build the controversial Nord Stream 2 pipeline from Russia, which both the European Commission and the US have reservations about.

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