The Politicization of Pipelines
Are pipelines commercial enterprises or political projects?
European pipelines blur the lines between business and politics. Widely held commercial entities who seek to further the benefits to their shareholders often find themselves partnered with state owned enterprises/monopolies, whose interests may lie in reaping rewards beyond those measured in financial metrics such as return-on-equity.
How do the Russian backed Nord Stream and South Stream pipelines fit into the EU's desire to furtherance implementation of the energy solidarity and security article of the Lisbon Treaty?
The European Commission has said that it is considering the introduction of "a general framework to deal with transmission pipelines entering the EU".
In a response to questions from Polish MEP Lena Kolarska-Bobinska, EU Energy Commissioner Guenther Oettinger said such a framework could include intergovernmental agreements.
Kolarska-Bobinska, a member of the European Parliament's committee on industry, research and energy has expressed concerns in respect to the Nord Stream pipeline.
She argues that there needs to be a guarantees, contained in a transparent legal framework signed by governments and backed by the Commission, to ensure that Nord Stream gas will be freely transportable and available on commercial terms to all EU partners.
Kolarska-Bobinska has voiced concerns arguably shared by many, that Gazprom is less a commercial enterprise, but an extension of the Russian state which could used to bring economic or political pressure to bear upon on specific nations. She points to Russia's decision to discount, by 30%, the price of gas supplied to Ukraine in exchange for long-term use of Ukraine's Black Sea port in Sevastopol.
The Commission's reply stressed that for each pipeline "one of the available options would be the conclusion of an intergovernmental agreement setting out the public law basis for their operation, protecting investors from regulatory or legal challenge or from political interference and providing an appropriate and reliable legal environment." Such a guarantee was attached to the planned Nabucco pipeline.
The introduction of EU-wide rules governing all external oil and gas pipelines would have a major effect on external energy policy, forcing agreement limits and transparency on energy companies like Gazprom.
Current pipeline and transit agreements are highly secretive. Often neither the Commission nor national governments know all the details of agreements governing the operation of such pipelines. Little is known, for example, about the Nord Stream and South Stream commercial agreements.
This issue also has implications the existing Yamal pipeline in Poland, jointly owned by Poland’s PGNiG, E.ON and Gazprom. A proposed agreement governing the future management of the pipeline has been recently condemned by the Commission for being in violation of EU law. The Commission has demanded a revision of the agreement.
There also would be similar implications for other private pipeline agreements involving Gazprom.
Source: European Energy Review