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    WTO Upholds EU on Third Energy Package

Summary

Russian complaints dating back to 2014 over EU application of energy law in respect of Russian gas have been largely rejected by a panel of WTO judges.

by: Mark Smedley

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Natural Gas & LNG News, World, Europe, Corporate, Litigation, Competition, Political, Regulation, Intergovernmental agreements, Infrastructure, Liquified Natural Gas (LNG), Pipelines, OPAL, News By Country, EU, Russia

WTO Upholds EU on Third Energy Package

A panel set up by the World Trade Organisation has rejected most Russian complaints filed in April 2014 against the European Union’s Third Energy Package (TEP).

The European Commission (EC) welcomed the ruling by the WTO panel, published August 10. It said the ruling did not find any basis to the claims concerning alleged EU discrimination in the TEP against Russian pipeline transport services, service suppliers, or against Russian natural gas, and that it also backed the EU over the ‘unbundling’ requirement to separate energy supply/generation from transmission networks, and on complaints also made by Russia on LNG and on upstream pipelines.

Russia also specifically challenged the unbundling measure as implemented in the national laws of Croatia, Hungary and Lithuania, but the WTO panel again rejected Moscow's arguments. 

“This is an important positive outcome for the EU, as it secures the core elements of the TEP,” the EC said, adding it would now analyse the ruling in detail, particularly on “a limited number of issues on which the WTO-compatibility of EU energy policy has still not been recognised.”

The panel did however uphold Russia's claim, relating to a 50% cap on use of the Opal pipeline onshore Germany by Gazprom, which the EU later partly relaxed by allowing the latter to hold a gas release programme; the EU and Germany however scrapped such restrictions on Opal during 2016-17.

According to Russian news agency Sputnik, the ministry of economic development in Moscow however pointed out that the WTO panel found it unlawful to provide subsidies for infrastructure projects supplying gas to the EU, but not from Russia. 

This covers use of subsidies under the EU’s TEN-E scheme (‘e’ stands for energy infrastructure). The EU had argued it needed to protect itself against future disruptions of gas supply (such as the one in January 2009 when all Russian gas transiting Ukraine was halted) and to diversify its supplies.

The panel acknowledged that the EU may have a reason to diversify its gas sourcing, but “had not demonstrated that natural gas is currently 'in short supply' in the EU’.

Gazprom Export issued an August 10 statement  noting where the WTO panel had adjudicated in Russia's favour.

For the WTO's version of the panel's key findings, click here.  For the full WTO panel documents list, including a link to its full report, click here.

EU member States had until 3 March 2011 to transpose the two directives into national law which together accounted for the Third Energy Package.