Making Nordstream a European project
The European Commission says it is considering the introduction of "a general framework to deal with transmission pipelines entering the EU". Such a framework could include intergovernmental agreements, Energy Commissioner Oettinger said in the name of the Commission in a reply dated July 28th to MEP Lena KOLARSKA-BOBINSKA's written question. In her question, she urges the need for such agreements including on Nordstream (also see her European Voice's article of 20 May 2010). If enacted, this would see the creation of new EU-wide rules governing all external oil and gas pipelines and would have a major effect on external energy policy.
The Commission reply stresses that for each pipeline "one of the available options would be the conclusion of an intergovernmental agreement setting out the public law basis for their operation, protecting investors from regulatory or legal challenge or from political interference and providing an appropriate and reliable legal environment."
"This would be a very important action on the part of the Commission" said Prof. Kolarska-Bobinska "After the adoption of the Security of Gas Supply Regulation, this would be the next big step in implementing the energy solidarity and security article of the Lisbon Treaty"
But it would also force agreement limits and transparency on energy companies, like Gazprom, which are likely to resist Commission proposals. Current pipeline and transit agreements are highly secretive. Often neither the Commission nor national governments know all the details of agreements governing the operation of such pipelines. Little is known, for example, about the Nordstream and Southstream commercial agreements.
The reply to MEP Kolarska-Bobinska's question could have implications for the existing Yamal pipeline in Poland, jointly owned by Poland’s PGNiG gas monopoly, EoN and Gazprom. A proposed agreement governing the future management of the pipeline has been recently condemned by the Commission for being in violation of EU law. The Commission has demanded a revision of the agreement. There can be little doubt that similar violations are included in other private pipeline agreements involving Gazprom. Therefore, if the EU does move towards introducing a transparent public legal framework, it could force changes to current commercial contracts and void such resale or re-export clauses.
"For the moment, the idea is under discussion at the Commission, but I hope to see a concrete proposal soon. We can not fully complete our internal energy market, if external suppliers set their own rules which often violate existing EU legislation. We need transparent pipeline agreements now and I welcome the fact that the Commission is moving in this direction," said Prof. Kolarska-Bobinska. "We should no longer accept backroom deals!"
Answer given by Mr Oettinger on behalf of the Commission
NordStream is a "Project of European Interest" – the highest priority – identified in the guidelines on Trans-european energy networks adopted by the Parliament and the Council in September 2006. NordStream is a valuable transmission pipeline that will contribute significantly to ensuring European energy security. It is correct, however, that it is not supported by an intergovernmental agreement between the states concerned.
In general terms, it is best practice for investors, consumers, suppliers and host states to insist on a clear legal framework addressing all issues relating to pipeline construction. That includes responsibility in environmental terms but extends also to protection of investors, investors' rights, expropriation, regulatory certainty and conflict of laws, amongst other pertinent issues. The Commission consistently recommends to pipeline operators and constructors and their investors to define precisely the division of responsibilities for the pipeline and to agree on the applicable law. In order to avoid later disputes, host states (including Member States) are also encouraged to conclude a public law framework for pipelines.
Taking into account the Lisbon Treaty principles of solidarity and security, the Commission is currently looking at the appropriateness of a general framework to deal with transmission pipelines entering the EU. One of the available options would be the conclusion of an intergovernmental agreement setting out the public law basis for their operation, protecting investors from regulatory or legal challenge or from political interference and providing an appropriate and reliable legal environment. In the framework of this ongoing reflection, the Commission is also assessing the case of NordStream. So far, no final conclusions have been drawn.
Question for written answer to the Commission, Rule 117
Lena Kolarska-Bobiñska (PPE)
1 June 2010
Subject: A European intergovernmental agreement for Nordstream
The Nordstream pipeline has been seen as controversial from its inception by a number of Member States, including my own. Besides environmental concerns, this project could allow Gazprom to supply gas to some western Member States while cutting off supplies to those in central and eastern Europe. Recent history has led many individuals to view Gazprom less as a commercial enterprise than as a tool of the Russian state used to bring economic or political pressure to bear upon others.
I believe, now that the Lisbon Treaty has been adopted, that the time has come to solve these issues by bring Nordstream into line with the principles of Article 194 TFEU.
I suggest we introduce a European intergovernmental agreement for Nordstream. Such an agreement based on a transparent public legal framework would ensure that the pipeline was seen by all Member States as enhancing energy solidarity.
A transparent intergovernmental agreement on Nordstream would answer concerns regarding freedom of transportation guarantees, underlining that resale or re-export clauses were not acceptable under European law. It could be ensured that Nordstream gas was freely transportable and available on commercial terms to all EU partners.
Furthermore, the Commission could use the existing intergovernmental agreement signed in July 2009 on the Nabucco pipeline as a base text for this agreement. This base, plus additional references to European energy legislation, would enable a Nordstream specific agreement to be speedily adopted by the Member States and Russia.
This agreement would not replace the existing commercial agreements, but would serve as an addition to them and a guarantee that those agreements were in line with the European acquis.
What would be the Commission’s opinion regarding the creation of an intergovernmental agreement such as this? What does the Commission believe should be done, now that the Lisbon Treaty has been adopted, to bring Nordstream into line with the principles of solidarity and security?