Wednesday

29th Mar 2023

Investors call for tough EU-Russia energy treaty

Stuck mid-way through a years-long legal battle with the Kremlin, the former owners of Russian oil firm Yukos have urged Brussels to negotiate tough energy rules with Moscow to protect other investors.

The businessmen behind GML, the majority owner of Yukos, would have no chance of getting their money back unless they had a legal means of redress, GML director, Tim Osborne, told EUobserver on Tuesday (1 December).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • Yukos oil tanker - the firm was taken over and dismantled by the Russian state in 2003 and 2004 (Photo: Flickr)

"The important thing for us is that Russia was bound by the ECT (Energy Charter Treaty)," he said.

"This shows it is imperative that the EU pushes for a robust, legally-binding agreement in the energy sphere, either through the ECT itself or under the terms of a new partnership agreement," he added. "Relying on warm and friendly language in the new agreement would be disastrous."

Mr Osborne's remarks come after an arbitration court in The Hague this week ruled that Russia is bound by the ECT, a 1994 pact on energy investments, because it signed the charter even though it did not complete ratification.

The ruling opens the door for GML to seek $100 billion (€66 billion) in compensation for what it says was a politically-motivated break-up of Yukos by the Kremlin in 2003 and 2004. The next round of the legal battle is expected to take two years.

The Hague decision may also embolden smaller ex-Yukos shareholders, such as Rosinvest and a group of seven Spanish businessmen, who are pursuing claims against Russia in Stockholm courts.

It is unlikely to help ex-Yukos chief, Mikhail Khodorkhovsky, who faces life in jail for embezzlement, however.

Russia withdrew its signature from the ECT in a move effective from October this year, blocking any new ECT-based law suits. It has also cast doubt on its bid to join the World Trade Organisation, another detailed rulebook on international trade.

Meanwhile, foreign investment in the country continues to dive as the business climate worsens.

Russia has slapped protectionist tariffs on a number of products in response to the economic crisis and it has bullied major Western firms, such as BP and Shell, out of lucrative energy deals. "Russia is essentially a criminal state now," US businessman Bill Browder told the BBC in November after a lawyer representing his firm died in a Russian prison.

The EU is currently negotiating a new, wide-ranging Partnership and Co-operation Agreement (PCA) with Moscow.

Brussels has abandoned its initial plan to make the ECT a part of the new pact and is instead seeking new energy rules based on ECT "principles."

"The PCA is a legally-binding agreement between two governments. Unless you [as a private company] specifically refer to the terms of the PCA in your contract, it could not be used as such," European Commission spokeswoman Christiane Hohmann said on whether the PCA could be used as the basis of any future legal claims.

Energy treaty 'undermines success of Green Deal'

Over 250 civil society organisations and trade unions say that the Energy Charter Treaty is incompatible with the Paris Climate Agreement and the new Green Deal - becoming an obstacle to the clean-energy transition.

MEPs urge EU to be ready to dump disputed energy treaty

Cross-party MEPs called on the European Commission to prepare to withdraw from the controversial Energy Charter Treaty (ECT) if negotiations for its modernisation fail. At the heart of the row is fossil fuel companies ability to sue governments for compensation.

Column

What does China really want? Perhaps we could try asking

Perhaps even more surprising to the West was the fact that the Iran-Saudi Arabia deal was not brokered by the United States, or the European Union, but by the People's Republic of China. Since when was China mediating peace agreements?

Opinion

Biden's 'democracy summit' poses questions for EU identity

From the perspective of international relations, the EU is a rare bird indeed. Theoretically speaking it cannot even exist. The charter of the United Nations, which underlies the current system of global governance, distinguishes between states and organisations of states.

Latest News

  1. The overlooked 'crimes against children' ICC arrest warrant
  2. EU approves 2035 phaseout of polluting cars and vans
  3. New measures to shield the EU against money laundering
  4. What does China really want? Perhaps we could try asking
  5. Dear EU, the science is clear: burning wood for energy is bad
  6. Biden's 'democracy summit' poses questions for EU identity
  7. Finnish elections and Hungary's Nato vote in focus This WEEK
  8. EU's new critical raw materials act could be a recipe for conflict

Stakeholders' Highlights

  1. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  2. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  3. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  4. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  5. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence
  6. Nordic Council of MinistersCSW67: The Nordics are ready to push for gender equality

Join EUobserver

Support quality EU news

Join us