A Brief History of EU Politics and Policy Towards Nord Stream 2

A summary can be found here.

Hi guys,

I continued my research on EU policy towards Nord Stream 2. This time, I put together a brief history of what has happened on the EU level so far. Also, I elaborated the EU mandate and the amendment of the gas directive that I’ve touched upon in my last post a bit more.

Check out the links for more infos!
Let me know what you think and put your remarks in the comments.

Disagreement between EU countries on natural gas pipelines from Russia has tradition.

The older brother of Nord Stream 2 – Nord Stream 1 – has caused an intense debate about the “solidarity between ‘old’ and ‘new’ EU Member States“, before it was opened in 2006, as the European Political Strategy Center points out. Eastern European countries feared that the pipeline, bypassing their territories, would make their own gas deliveries uncertain and take away substantial transit revenues. Nevertheless, the EU finally called Nord Stream 1 a project of “European interest” that improves supply security.

In 2015, Gazprom and five European energy companies announced to build a second pipeline, in parallel to the track of Nord Stream 1: Nord Stream 2. The European Commission called Nord Stream 2 a fully “commercial project” and left it to the companies to decide which infrastructure was economically viable for them, as long as the pipeline followed EU laws. Not anymore did they speak of common interests.

Instead, Energy and Climate Commissioner Arias Cañete emphasized that new gas networks should fit into the EU energy diversification strategy and that the Commission will continue to support Ukraine as a transit countryIn light of the Russian-Ukrainian gas dispute in 2009, cutting of some European countries from gas supplies for several days, this can be understood as doubts about Russia’s supply reliability in the future and as a reference to Russia’s increasing power coming from Europe’s dependence on its gas. Cañete further said that the “Nord Stream 2 project cannot ever become a project of common interest“. According to EU Commission President Juncker, “the Energy Union cannot be held hostage by pipeline politics, and any new project must comply with European rules and align with European interests”.

In 2017 however, the EU had to accept that the Third Energy Package does not apply to pipelines entering the EU from third countries. Amongst other things, this legislative package determined that energy supply and network operations have to be unbundled. In the case of Nord Stream 2, Gazprom is gas supplier and pipeline operator. Subjecting it to this regulation would have made it a lot less (economically) attractive. For overcoming this regulatory gap, the European Commission demanded a common EU mandate for negotiating a legal regime for the operation of Nord Stream 2 with Russia. As Maroš Šefčovič, Vice-President for the Energy Union, said, “such an important infrastructure project as Nord Stream 2 cannot happen in a legal void“. However, the Council Legal Service clarified, that such a mandate did not fall under exclusive EU competence and required an unanimous ratification by the member states. 

Since the non-agreement of Germany was out of question, the Commission proposed an amendment to the Gas Directive extending its scope of application to third countries. Like this, ownership unbundling would be required for Nord Stream 2 as well. However, the Commission’s proposal was rejected in the Council last week. This has been preceded by a last minute diplomatic agreement between Germany and France, after France had announced to support the proposal. After further negotiations with the Commission and the Parliament, a compromise was achieved only yesterday. Thus, the Third Energy Package will be extended to pipelines coming from non-member countries. However, it includes a special arrangement that allows Germany to grant exceptions from this rule independently. Naturally, the Commission is framing the possibility of exceptions to the rule differently by saying “Exceptions are only possible under strict procedures in which the Commission plays a decisive role” in a recent press release. Details of the agreement are still unknown.

After all, it seems like Nord Stream 2 will not be fundamentally affected by the amendment. Nevertheless, the Commission saved its face at least a little bit and is now one step closer to its goal of an integrated internal gas market.

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