[Premium] Nord Stream 2 Mandate Talks Resume

As political life picks up again in Brussels after the summer break, Nord Stream 2 (NS2) debates are back on the table for EU policy-makers. A conference held by media platform EurActiv and the NS2 group September 6 outlined the main challenges ahead for the project pipeline. They include uncertainty on the European Commission (EC)''s role in the negotiations;on the transit waters the pipeline would run through; and Ukraine's delicate position.

A single negotiating partner

The EC requested on June this year a mandate from EU member states to negotiate directly with Gazprom on NS2, in order to rein in internal EU political tensions and to have the first say on how EU law should be applied to the project. Now that the summer break is over, EU countries reconvene as usual, to discuss all the finer details of a mandate they may end up not extending. The first of several meetings will take place September 12.

The main piece of legislation that the EC can evoke is the gas directive included in the Third Energy Package. However, many experts agree that fitting NS2 in there is tricky, for the directive either is not clear enough, or does not really apply to, third-party downstream transmission pipelines such as NS2. This is the point of view of a lawyer specialising in these issues, Ana Stanic, who also believes that if the EC receives the mandate, “the project will certainly not go ahead, because of the unwillingness of the EC to reach a deal with the Russians." 

In any case, it is uncertain that member states will agree to give the EC exclusive power to negotiate with third-parties and it might not be until the German elections at the end of the month that there is a more definite answer. Germany's chancellor, Angela Merkel, has expressed doubts about the need for a mandate. Two major German companies are involved with financing NS2: Uniper and BASF.

Law of the sea

Another question often asked is whether any of the countries around the pipeline’s projected route – Finland, Sweden, Denmark and Germany – would be able to single-handedly put an end to the whole thing. The answer is no, at least not for political reasons. According to the UN Convention on the Law of the Sea, NS2 would run under “exclusive economic zone” waters, which means that the aforementioned countries only have claims over resource exploration and marine environment protection.

As such, only serious environmental risks could prove to be an obstacle for the project. And there is already NS1 that operates without any problems so far, and whose route NS2 will follow. The Baltic Sea bed is littered with ammunition from the second World War and other hazardous materials so there is reason for concern.

Ukraine's position

“Is NS2 consistent with the EU’s foreign policy?” is the question asked by Thomas Pellerin of the Jacques Delors research Institute. Looking at current sanctions against Russia, and at the EU’s commitment to help Ukraine develop a solid market economy, it could not be said to be.

However, Andreas Goldthau of the University of London argues that Gazprom faces domestic and international market pressure, which could contribute to developing a balanced relationship between the EU and Russia. In this case, NS2 representative Sebastian Saas adds that there would be enough European market for gas coming both from NS2 and through Ukraine. The timely progress of Ukraine’s energy sector reforms is then key.

Sara Varga