Thursday

2nd Feb 2023

EU weakens 'Gazprom clause' on foreign energy investors

EU ministers have dismissed the idea of building a robust shield to protect the union's energy market from foreign buyers such as Russian state-owned energy giant Gazprom.

According to an agreement reached on Friday (10 October), each EU member state will remain free to decide whether to allow foreign bidders entering their market. However, in doing so, they should take into account the union's energy security, while also consulting the European Commission.

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  • The result is a victory for Germany, which imports 40 percent of its gas from Russia (Photo: gazprom.ru)

The result is a victory for Germany, which imports 40 percent of its gas from Russia. Berlin secured enough support among ministers to alter a European Commission-sponsored safeguard, known as the "Gazprom clause."

The EU's executive body suggested last year that foreign bidders would be prevented from expanding in the 27-nation energy market without limit.

Instead, they would be obliged to follow the same unbundling requirements as the union's own firms, while an investor's home country should be equally open to EU investments.

The Gazprom clause was linked to plans to separate production and transmission channels in the EU's energy firms, while trying to alleviate fears of those member states who said a forced break-up of assets ran a risk of EU companies falling under the control of foreign firms.

In a separate deal, the Netherlands secured strengthened protection for its own energy sector as well as sectors in Denmark, Sweden and the UK vis-a-vis competitors from those EU states reluctant to further liberalise their market.

Eight EU states - led by Germany and France - refuse to take the path of so-called full ownership unbundling, in which a parent company sells its transmission networks to a different firm.

Instead, they are set to follow a softer line, in which a parent company retains ownership of transmission networks, but owned by the same set of shareholders and heavily supervised by a national regulator.

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