EC takes aim at Russia with ‘energy security’ package

The European Commission published a package of proposals on February 16 meant to increase the bloc’s energy security        in case of interruptions of supply, as well as “equip the EU for global energy transition”.

EC’s much-anticipated proposals, reported repeatedly in recent months by international media, are seen as the latest in a string of initiatives by the bloc’s executive to diminish the EU’s dependence on Russian energy supplies, although commissioners Maroš Šefčovič and Miguel Arias Cañete were keen to emphasise that the proposals were not specifically targeting Russia’s Gazprom.

Šefčovič, the EC’s vice-president in charge of energy union, told reporters that Russia would continue to play an important role in EU’s energy sector in the future, but said that the EC wanted the relationship to be based on “transparent rules and full respect for European law.”

Cañete, whose portfolio is climate action and energy, said that the strategy was meant to deal with any kind of supply interruptions, not just a political decision to stop gas flows – an indirect reference to Moscow cutting off gas deliveries in 2006 and 2009 over price disputes with Ukraine – while the specific proposal that the EC have the power to examine commercial contracts (in cases where one company has more than 40 per cent market share) would apply to all suppliers, not just Gazprom.

Nevertheless, Gazprom is likely to be the biggest loser of EU’s continued drive to diversify energy sources and suppliers. Over the past decade, Moscow has sought to work around EU law by signing bilateral intergovernmental agreements with EU member states – as it did in the case of the South Stream pipeline, which would have crossed Bulgaria on the way to Austria and Italy – but might have that avenue cut off under the new rules put forth by the EC.

One of the proposals envisions the Commission having the right to review future intergovernmental agreements to ensure their compliance with EU law, with member states’ governments required to take into account the EC’s opinion. In case a member state decides to go ahead with a bilateral agreement after the EC has identified breaches of EU legislation, the country could be subject to infringement proceedings.

Another potential blow to Gazprom’s market share in Europe is the package’s focus on developing liquefied natural gas (LNG) infrastructure. Gazprom’s deliveries to Europe are made by pipeline and the company’s limited forays in the LNG segment are mostly directed at Asian markets.

With LNG production expected to grow strongly in coming years, as large-scale liquefaction facilities go online throughout the world (notably in the US and Australia), this segment could play a larger role in the future, which is why the EU wants to “improve access of all member states to LNG as an alternative source of gas.”

Again, Gazprom stands to lose the most from the development of inter-connection infrastructure and storage facilities, as the EC specifically singled out south-eastern of Europe, central-eastern Europe and the Baltic region as areas that “do not have access to LNG and/or are heavily dependent on a single gas supplier” – another oblique reference to the Russian state-owned gas giant.

The EC’s proposal had no time-table for implementation, with analysts saying that it could run into opposition from some member states including Germany, which pays the lowest price on Russian gas as the largest single importer in the EU, but also other governments that could resent the EC’s increased role in the energy sector.

(Maroš Šefčovič, left, and Miguel Arias Cañete, presented the European Commission’s energy security package on February 16 2016. Photo: EC audiovisual service)



The Sofia Globe staff

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