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    EU Diplomats Approve Gas Directive Talks

Summary

The decision will not be welcomed by a large sector of the European gas industry.

by: William Powell

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Complimentary, Natural Gas & LNG News, Europe, Corporate, Import/Export, Political, Ministries, Regulation, Infrastructure, Pipelines, Nord Stream Pipeline, Nord Stream 2, News By Country, EU, Russia

EU Diplomats Approve Gas Directive Talks

The overall objective of the proposed 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. This will make the EU's legal framework more consistent, enhance transparency and ensure legal certainty for both investors in gas infrastructure and users of the network.

To take account of the existing lack of specific rules applicable to pipelines between EU member states and third countries, the proposed amended directive foresees the possibility of granting derogations for existing pipelines. The negotiation mandate also foresees that technical agreements about the operation of pipelines that were concluded between transmission system operators should remain in force, provided they comply with EU law, the Council of the EU said in a statement.

The negotiation mandate sets out a procedure for the negotiation of agreements between EU member states and third countries regarding the operation of a gas pipeline. The agreements could be used for example to resolve any potential incompatibilities between EU law and third country law.

Although not mentioned by name, Gazprom's Nord Stream 2 is a case in point and indeed some say it is the sole reason for the amendment, other normative attempts to regulate the offshore pipeline through existing laws and regulations having hit a dead end. The proposed  amendment has been robustly criticised by consultants and the gas industry body Eurogas as well as by Nord Stream 2 AG itself. They say among other things that it gives more powers to the European Commission (EC) and interferes with existing legislation and conventions.

According to the proposal, member states wishing to enter into negotiations with a third country to conclude, amend or extend such an agreement that would have an impact on the EU's common rules would need to notify the EC. For the part which could have an effect on EU rules, the EC would then authorise the member state to enter into formal negotiations.

The amendment to the gas directive was proposed by the EC in November 2017. The European Parliament adopted its position on the file in April 2018. Following today's agreement on the mandate, the Presidency of the Council can enter into negotiations with the European Parliament.

Separately the US government is  bringing pressure to bear on countries and companies with an interest in the pipeline going ahead, through the threat of sanctions.

Denmark still deciding

Denmark is still deciding whether or not to allow NS 2 to cross its territorial waters, having specifically changed the national law to give it that power over transit pipelines, the energy agency told NGW early February. Before a permit for a transit pipeline  in territorial waters can be issued, such as Nord Stream 2's application from April 3, 2017, the project must be assessed if it is compatible with Denmark's foreign, security and defence policy interests.

If it refuses, then NS 2 will have to take a different route from the already-operational NS 1. The law took effect January 1, 2018 and the case is now at an advanced stage, the agency said.

As time was passing and the 2019 completion deadline nearing, NS2 made a second application August 10, 2018 concerning a longer route only on the continental shelf northwest of Bornholm. The environmental impact assessment (EIA) was in public consultation in Denmark until December 12 and, and concerning transboundary environmental impacts in consultation in the Baltic Sea countries, for a further week. The northwestern route is on the continental shelf where the United Nations Convention on the Law of the Sea is applicable and hence only an EIA approval is needed.

The agency told NGW it had received 11 responses to the national EIA and responses related to the transboundary environmental impacts were received from Sweden, Estonia, Latvia, Lithuania, Finland, Poland and a German non-governmental organisation which it did not name. The responses relevant for the project will now be addressed, it said, with no time frame.