Commission takes steps to extend EU gas rules to import pipelines

NORD STREAM-2

Pegs are applied between pipe and wire cages. The Nord Stream-2 pipeline would transport Gazprom gas from Russia to Germany.

EU says amendment to clarify the core principles of energy legislation but Nord Stream-2 argues proposal ‘would first create legal uncertainty’


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What's This?

The European Commission took steps on November 8 to extend European Union gas rules to import pipelines, a move that the EC says is not aimed at preventing the construction of any new gas pipelines such as Nord Stream-2.

To improve the functioning of the EU internal energy market and enhance solidarity between Member States, the Commission on November 8 proposed to amend the EU Gas Directive of the Third Energy Package.

The Legal Services of the Commission and of the Council have recently concluded that the Gas Directive does not set out a comprehensive framework for gas pipelines to and from third countries, the Commission said on November 8, adding that this lack of a regulatory framework on the EU’ territory is detrimental to the functioning of the internal energy market and the security of supply in the Union.

The aim of the amendment is to complete the existing Gas Directive and clarify that the core principles of EU energy legislation – third-party access, tariff regulation, ownership unbundling and transparency – will apply to all gas pipelines to and from third countries up to the border of the EU’s jurisdiction, the Commission said, adding that this will ensure that all major pipelines entering the EU territory comply with EU rules, are operated under the same degree of transparency, are accessible to other operators and are operated efficiently. Once the European Parliament and Council adopt the amendment these changes will constitute a significant step towards the completion of the Energy Union, the Commission said, adding that this clarification will also contribute to meeting the goals of the EU gas market, which include increasing competition between gas suppliers and providing a boost to energy security in the EU.

Ensuring that all major pipelines wholly or partly located in EU territory are operated efficiently under a regime of transparent regulatory oversight will diminish conflicts of interests between infrastructure operators and gas suppliers, and guarantee non-discriminatory tariff setting, the Commission said.

In addition the Commission said the EC proposes to allow Member States to be able to grant existing cross-border pipelines certain derogations from the application of the Directive on a case-by-case basis, as long as such derogations are not detrimental for competition or security of supply.

Impact on Nord Stream-2

Regarding the Nord Stream-2 pipeline from Russia to Germany, the Commission said on November 8 that the proposal concerns all gas pipelines to and from third countries and is not aimed at preventing the construction of any new gas pipelines.

“The recent legal and public debate concerning Nord Stream 2 only underscores the value of providing legal clarity on this issue across the EU. The Gas Directive sets out a clear regulatory framework for the operation of gas pipelines inside and on the borders of the EU. These rules will apply to Nord Stream 2 the same way as to all other projects. Project promoters should welcome the legal certainty this proposal would create,” the Commission said.

Regarding the impact of the proposal on the negotiation mandate on Nord Stream 2 requested earlier this year, the Commission noted that this proposal is complementary to the Nord Stream 2 mandate. “Given that Union law cannot be directly applied in third countries an agreement with Russia remains the best instrument to establish a clear, coherent and stable regulatory framework for the operation of Nord Stream 2. The Commission considers this modification of the Gas Directive a priority since it will create legal clarity for all third-country projects, by filling a legal gap. Nevertheless, the Commission remains available to engage in negotiations on the operating conditions of Nord Stream 2. The Commission will therefore not withdraw its proposal for a negotiation mandate and awaits the Council’s decision on its earlier recommendation to authorise negotiations with Russia,” the Commission noted.

Nord Stream-2 said the corporation takes note of the Commission’s intention to expand the scope of the Gas Directive to pipelines outside the EU’s internal market and will analyse the content of this amendment as well as its impact on the existing regulatory framework.

Sebastian Sass, an advisor to Nord Stream 2 – EU Representative, told New Europe on November 8 that it appears that the Commission will not provide a proper impact assessment which would normally be expected according to the European Commission’s own Better Regulation principles. “This legislative proposal seems to be a far-reaching change to the scope of application of the EU’s energy laws, which would have merited a thorough consultation of stakeholders,” Sass said.

He argued that the European Commission’s proposal “would first create legal uncertainty by causing the conflict of laws that the Commission has always claimed to be worried about. It seems the Commission intends to continue pursuing its request for a negotiation mandate in order to resolve that very conflict of laws that would not exist without the new legislation. Such an approach is the opposite of ‘legal clarity’”.

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