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    EU Gas Directive Change Would Create More Problems: AD Little

Summary

The amendment only makes things worse, again, according to the consultancy AD Little

by: William Powell

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EU Gas Directive Change Would Create More Problems: AD Little

The fourth revision of the amendment to the EU Commission (EC) Gas Directive was published February 4 and found wanting by consultancy Arthur D Little. It said February 7 that it adds bureaucracy, uncertainty and cost instead of meeting the EC’s objectives of improving competition and security of supply.

"Echoing our previous reports, the analysis outlines why the entire amendment does not reach its objectives, and why any issues concerning the functioning of the internal EU gas market should remain as they are until the imminent overhaul of the entire Gas Directive in 2020," it said.

It listed five key issues that are addressed in a way that could make things worse:

  1. It overcomes the legal conflict between the Directive and the UN Convention on the Law of the Sea, but at the expense of practical difficulties that will drive uncertainty and greater cost.
  2. It excludes upstream pipelines that are connected to existing processing terminals and production systems from the regulation. This creates discrimination between exporters from different third party countries.
  3. It provides derogations for existing pipelines, under specific conditions, but the reasons stated for granting derogations are either too limited or arbitrary.
  4. It gives the EC the authority to grant member states the right to renegotiate or enter into new gas supply agreements with third countries, but that implies that the EC has even more power.
  5. And it clarifies the status of interconnectors and the applicability of Network Codes but does not resolve the unenforceability of Network Codes as it defines pipeline connections with third countries as interconnectors.

It said the revision should therefore be abandoned, and any changes left to the forthcoming review of the Gas Directive in 2020.  The full report may be read here. The Romanian amendment was criticised for muddying the waters last month.