Tuesday

22nd May 2018

Juncker outlines legal hurdles for Russia pipeline

  • Nord Stream 2 plans to start taking delivery of pipes in September (Photo: Nord Stream)

The European Commission has indicated that the Nord Stream 2 gas pipeline could face similar legal hurdles to South Stream, a defunct Russian project.

Commission president Jean-Claude Juncker outlined its position in a letter to nine EU leaders, dated 3 June and seen by EUobserver.

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  • Juncker (l) met with Putin on Thursday (Photo: kremlin.ru)

“If built, Nord Stream 2 would have to fully comply … with applicable EU law, including on energy and the environment. This is also the case for off-shore infrastructure under the jurisdiction of member states, including their exclusive economic zones”, he said.

“The construction of such an important infrastructure cannot happen in a legal void, or only according to Russian law”, he added.

The pipeline is to be built from Russia to Germany under the Baltic Sea, with parts of it to lie in Danish, Finnish, German and Swedish maritime zones.

EU energy law, the so called third energy package, obliges pipeline operators to divest production assets and to share pipelines with competitors.

The EU laws led Russia to abandon South Stream, a gas pipeline that was to lie under the Black Sea and then run on land from Bulgaria to Austria.

Gazprom, the Russian firm behind both projects, had been hoping for different treatment for Nord Stream 2.

Jens Mueller, a spokesman for the Gazprom-run Nord Stream 2 consortium, recently told EUobserver that EU energy law would not apply to the off-shore part of the project.

“Nord Stream 2 will bring gas to the border of the EU internal energy market, whereas South Stream was planned to transport gas across the internal market itself as well”, he said.

“Connecting pipelines within the internal market that will transport from Nord Stream 2 onwards across Europe will be subject to all EU energy legislation; however, such projects are not part of Nord Stream 2”.

Juncker sent the 3 June letter to the leaders of Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia.

'Beyond legal'

The nine EU states had earlier complained that Nord Stream 2 would make Germany more secure and central Europe less secure in terms of Russian gas supplies.

They also said it would make Ukrainian transit pipelines obsolete, harming its economy at a time when the country was trying to align itself with the West.

Juncker, the EU commission president, did not rule out the possibility of finding a “legal framework” that would enable Nord Stream 2 to go ahead.

He said his services are in contact with German regulators and that they would keep energy ministers from all 28 EU states informed.

But he acknowledged the nine countries’ concerns, saying that the “impact” of Nord Stream 2 “goes beyond the legal discussions”.

He said the pipeline “could alter the landscape of the EU’s gas market while not giving access to a new source of supply”. He also indicated that it could help Gazprom “to leverage a position of dominance to the detriment of competitors and consumers”.

Nord Stream 2, which is to lie alongside the already operational Nord Stream 1, would give Russia and Germany control of 70 percent of Russian gas exports to the EU.

Juncker added, on a political note: “I count on your continued support to agree on European infrastructure that will unite us instead of dividing us”.

He repeated the phrase almost word for word in a speech at a business forum in St Petersburg, Russia, on Thursday prior to meeting Russian leader Vladimir Putin.

He said in St Petersburg that he had "a strong preference for pipelines that unite rather than pipelines that divide”.

Gazprom, the majority shareholder, is building Nord Stream 2 with Germany’s BASF and E.ON, Engie (France), OMV (Austria) and with Anglo-Dutch firm Shell.

It plans to start taking delivery of pipes in September and for the project to be operational from 2020.

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