Brussels To Extend EU Rules to Gas Import Pipes (Correction about Derogations)
Correction: the penultimate paragraph has been corrected, to state that derogations for existing pipelines WILL be allowed (the original story said they would not).
The European Commission (EC) said November 8 it will propose common rules for gas pipelines entering the European internal gas market, a move set to challenge the 55bn m3/yr Gazprom-led Nord Stream 2 project. Other third country pipelines could also be affected.
Announcing the move, EC president Jean-Claude Juncker said the aim of the amendment – to the EU’s 2009 Gas Directive – would 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.
“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 amendment is adopted by the European Parliament and Council these changes will constitute a significant step towards the completion of the Energy Union,” the EC said. It called on both institutions to ensure the “swift adoption and implementation of these proposals.” It did not give any timeline for implementation.
In June 2017, the EC said it wanted the legal framework for Nord Stream 2 (the offshore section of the pipeline) to fully reflect the EU’s energy law and international law. The EC view of the NS2 project has consistently been that it will not contribute to achieving the goals of diversifying the sources, routes and suppliers to the EU market. The German government has taken a diametrically opposite view, and Uniper finance chief Christopher Delbruck said November 7 that NS2 was “important for the gas business in Europe;” Uniper is among a handful of non-Russian firms co- financing the project. Poland has argued implacably against NS2 (in part supporting non-EU member Ukraine's stance) while Denmark recently adopted new laws giving it a right to reconsider NS2’s route on the basis of national security.
The EC now argues that, for cross-border pipelines, “it is not practical to have different regulatory regimes apply to the two ends of the same pipeline” but that international negotiations could be initiated to agree on the operational principles of the pipeline in question, if a relevant third country requested.
An EC factsheet on the proposed new rules adds that the EC “will not withdraw its proposal for a negotiation mandate and awaits the Council's decision on its earlier recommendation to authorise negotiations with Russia” and that, in addition to NS2, the new rules could also affect the Trans-Adriatic Pipeline (TAP) project. The EC also said it would "continue supporting Russian gas imports transiting through Ukraine."
Impact too on Norway, North Africa, and post-Brexit UK
“Existing gas pipelines impacted by this proposal enter the EU from Norway, Algeria, Libya, Tunisia, Morocco and Russia. The proposal may also have an impact – post-Brexit – on pipelines connecting the UK with EU Member States,” the factsheet further explains. It further notes that derogations will be allowed for existing pipelines - but it will be EU member states granting any derogations, not the Commission (for further details on this, see answers 3, and 5 to 7 of the accompanying EC factsheet on the proposed new rules).
Net gas imports into the EU were 69.3% in 2015 and trending higher, the EC said, noting that Russia covered 42% of EU gas imports in 2016, followed by Norway 34%, Algeria 10%, and total LNG 14%.
Mark Smedley