• Natural Gas News

    EC Adopts Energy Security Package



Miguel Arias Canete says the European Commission is proposing an automatic notification on intergovernmental agreements

by: Drew S. Leifheit

Posted in:

Natural Gas & LNG News, Security of Supply, Energy Union, Intergovernmental agreements, Liquefied Natural Gas (LNG), Storage

EC Adopts Energy Security Package

The European Commission formally adopted February 16 an energy security package that focuses on security of supply, but also enhances the stability of the European energy market, according to EC  vice president Maros Sefcovic, in charge of the energy union project.

The package will now be handed over to the European Parliament and European Council for deliberation.

Recalling the turmoil created by the events in Ukraine, he said that such crises can have direct impacts upon security of energy supply in Europe, influencing formulation of the package. Incidentally, as a Slovak he comes from a country whose gas supplies have been repeatedly affected by gas disputes between Ukraine and Russia.

“Such threats to our energy supply come on top of existing vulnerabilities of certain European countries, as we learned from the stress tests of 2014, which were a direct consequence of those crises, so we could learn how to address such challenges in the future,” he said. 

Sefcovic said the overall goal of the package was to decrease member states' vulnerability and dependency by diversifying sources of energy and promoting alternative technologies.

He added, “This implies extending Europe's access to LNG and making further use of storage solutions. It also implies the further enhancement of regional cooperation among member states in preventing and dealing with gas supply crises.”

EC 'not snooping' with IGA demand...

It also includes, he said, a proposal to increase transparency of intergovernmental agreements (IGAs) and commercial contracts, which he said would allow gas importers to make better deals for European consumers and ensure that EU law is always respected.

Of the IGA stipulation, EU Commissioner for climate action and energy Miguel Arias Canete, who spoke after Sefcovic, said the EC is proposing an automatic notification of gas supply contracts consisting of more than one year if the market share is big enough to be relevant for security of supply. “We consider a 40% market share to be an appropriate threshold,” he said.

“Let me clarify,” he continued. “This is not about the Commission snooping on commercial deals. It's not about the Commission checking prices or making changes to private contracts; this is about having greater transparency on the security of supply situation of a given region. That will help us identify cases where risk assessment and prevention measures need to be updated or adapted.”

He added that the current system does not ensure that IGAs comply with European Union law or policies, and once such agreements have been signed it is often too late for termination. Once negotiated, he said, IGAs are rarely successfully renegotiated once they have already been enacted and the EC has no recourse if they are signed.

According to him, around one-third of the 124 existing IGAs contain provisions that did not comply with European Union law, which he termed “damaging”.

The proposal, he said, is a mandatory assessment of any IGA before it is signed, with the EC notifying the member state of any doubts within 6 weeks and give a final opinion of compatibility with European law within 12 weeks, according to him. 

He called it an important step to ensure a level playing field for all.

... or neglecting the COP21 agenda

Canete said the EC is committed to the energy transition and plans on using gas efficiently to make good on its commitments to the Paris climate talks, while Sefcovic mentioned the package's emphasis upon decarbonisation of the transport sector.

Asked whether the energy package measures are a “dedicated war on Gazprom”, which is one of Europe's main, reliable suppliers, Sevcovic denied that the whole thing is based on the “Gazprom issue”.

“It's definitely not,” he said. “We've been working on it for years, and did the stress test as a result of the gas crisis in 2009.”

Calling Europe's relations with Russia “complex”, he said the EU recognises the importance of the partnership.

“Our primary response to the security of supply concern is diversification – therefore, we are opening to new suppliers, to LNG, which is a flexible global commodity that can be supplied on short notice,” said Sevcovic, who added the importance of a liquid gas market in both eastern and western Europe.


 Drew Leifheit