European Commission on `Nord Stream 2` - New Amendments to Gas Directive Proposed

On 8 November 2017 the European Commission issued a proposal for a Directive
amending Directive 2009/73/EC concerning common rules for the internal market in
natural gas COM(2017) 660 final. The main aim of the proposed Directive is to make the Gas Directive in its entirety applicable to gas pipelines that are connecting a third state with a EU state, like the envisaged Russian-German Nord Stream 2 pipeline.

Under the proposed amendment to the gas directive, all mechanisms of the Gas Directive like third-party access, tariff regulation, ownership unbundling and transparency would not only apply to gas pipelines running from one  EUmember state to another (current legal situation), but also to pipelines coming from third countries into the EU. The EU admits that the rules on interconnectors are not applicable to pipelines entering the EU, but claims that `there [already] is an practice of applying core principles of the regulatory framework set out by the Gas Directive in relation to third countries`.(page 2). The EU says that this `practice shall now be merely set out in a explicit and coherent manner` (page 2).

The European Commission says that the proposal seeks to implement key objectives of the Energy Union, especially in the dimension of energy security (whereas one of the key drivers of energy security is the completion of the internal energy market) (page 3). The president of the European Council Donald Tusk, speaking yesterday, repeated his earlier statement that Nord Stream 2 would contradict EU energy security interests, as it would help with diversifying gas supplies to the EU. He also left no doubt that the new proposal was designed with the sole purpose of stopping Nord Stream 2 in mind, even urging Member States in a letter, sent yesterday, to speed up the legislative process to resolve the proposal  before the Nord Stream project is completed in 2019.

The background for this is the fact that, if the project is completed before the new legislation is moving into action, Germany could apply for an extension from the unbundling rules under art. 36 Gas Directive 2009/73/EC and Nord Stream 2 would, if approved, not have to comply with these rules. All of this is relevant because Gazprom is viewed by the EU as a company that does not fulfil the EU`s standards on unbundling in the energy sector and the EU repeatedly tried to bar Gazprom from operating in the EU (see for instance the so called `Gazprom clause` in art. 11 Gas Directive).


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