[Premium] EU Interests Debate New Directive

The European Union is preparing for accelerated negotiations on reforms concerning pipeline gas transit with third countries, prompted by the ongoing Nord Stream 2 offshore pipeline project between Russia and Germany.

The European Commission published a draft directive to cover this which was criticised for a number of reasons by gas industry lobby group Eurogas  and others, after the EC failed in October to secure support for a mandate to negotiate terms for NS2 operation

Spearheaded by Poland which is determined to stop the project, the reform aims at imposing European rules on competition and transparency on pipelines from non-EU countries, “to ensure legal certainty and a level playing field,” argued Jerzy Buzek, who chairs the energy committee at the European Parliament, at a hearing hosted by the European Economic and Social Committee (EESC) in Brussels March 8.

In practical terms, the parliament’s position on this reform is to extend implementation of EU law as far as possible to third-country pipelines, and to give the European Commission (EC) an active role in approving such projects. Buzek, a former prime minister of Poland, argues that the EU's high dependency on imports – it gets 62% of its gas from abroad, mostly Russia and north Africa – justifies control measures to assess the political interest of the EU as a whole in building pipelines with non-EU countries.

Garrett Blaney, the president of the Council of European Energy Regulators (CEER), suggested that a strong EU energy system that ensures competition and low prices was more important than just building pipelines.

Tomas Maltby, lecturer at the King's College London and Antoine Simon, from enviromental lobby-group Friends of the Earth, were both sceptical of pipelines that could become stranded assets in the near future. The former also praised the EC's activities in promoting competition and punishing abusive monopolies.

However, Ana Stanic, director of E&A Law, argued that the reform proposal as it stands today may breach several international conventions, in particular the UN Convention on the Law of the Sea (Unclos), World Trade Organisation (WTO) agreements, the Energy Charter Treaty (ECT), and possibly Bilateral Investment Treaties (BIT) each European country is a party to. She believes that the reform being negotiated would create an unclear legal situation where there was none before, and thus the EU could be subject to numerous international arbitration procedures, not just against Russia.

“Legal advice is taken into consideration but the political point of view takes priority” replied Sebastian Barkowski, from the Permanent Representation of Poland to the EU, echoing a previous remark by  Jerzy Buzek: “Even if the economic and environmental criteria are met, a project is completely unacceptable if it's not good from the political point of view. One may still go ahead of course, but don't expect political support.”

The European Parliament expects to adopt the proposal after due negotiations and amendments by the end of the Bulgarian presidency of the Council of the EU, which means before June 30.