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    EU Adopts Amended Gas Directive

Summary

Observers see the risk of regulatory uncertainty.

by: William Powell

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EU Adopts Amended Gas Directive

The rules governing the European Union (EU)'s internal gas market will in future also apply to pipelines to and from third countries, following the adoption April 15 of an amendment to the gas directive, the European Commission (EC) said.

It said the adoption was "the final step in the legislative process... which aims at closing a legal gap in the EU's regulatory framework and boosting competition in the gas market."

Most of the EU's imports come by pipeline from Norway, Russia and Algeria, and a small amount from Libya. Norway's exports are anyway compliant with EU law as the pipelines are not owned by the producers. And the Algerian infrastructure is already operational. But the Russian planned Nord Stream 2 will be affected.

Under a compromise reached between Germany and France in February, it will be for the German regulator to ensure that NS 2 meets the conditions of the gas directive. But according to a recent paper by Katja Yafimava published by the Oxford Institute of Energy Studies, the directive allows the EC a significant amount of discretion and so it is capable of delaying or suspending its operation.

"The amendment has created significant regulatory uncertainty about the degree of utilization of Nord Stream 2, and consequently of the EUGAL pipeline in Germany, to which it is planned to be connected," she writes.

Romania's energy minister Anton Anton said he was "very happy that this important file has been adopted. We worked hard to find a compromise that would be acceptable to everyone, and I think we now have a good solution which will guarantee that we have a fair and competitive European gas market."

The overall objective of the amendment to the gas directive is to ensure that the rules governing the EU's internal gas market apply to gas transmission lines between a member state and a third country, up to the border of the member state's territory and territorial sea.

Among the main elements of the EU gas market rules, which are set out in the so-called gas directive from 2009, are ownership unbundling, third-party access, non-discriminatory tariffs and transparency requirements.
The amendment provides for the possibility of derogations for existing pipelines to and from third countries, as well as clear procedures for negotiations with third countries and for exemptions regarding new pipelines.

The new directive will enter into force 20 days after its publication in the Official Journal of the European Union and member states will have nine months from entry into force to transpose the new rules into national law.

Romania's promotion of this amendment, intended to liberalise Europe's liquid and transparent gas market still further, sits uneasily with the government's raising of taxes on gas production, restrictions on where the gas will be sold, and its interventions in the power market over the last eight months.