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EU Can’t Extend Gas Market Regulation To Nord Stream 2

Pipeline

A legal opinion by the Council of the European Union has rejected a proposal by the European Commission to extend EU-wide gas rules to offshore pipelines, dealing a blow to the Commission’s effort to regulate Gazprom’s Nord Stream 2 pipeline.

According to an opinion of the legal service of the Council of the European Union—the body where EU ministers meet—seen by Reuters, extending the EU gas rules to offshore pipelines such as Nord Stream 2 would violate the United Nations Convention on the Law of the Sea.

Gazprom’s Nord Stream 2 pipeline project to twin the existing Nord Stream pipeline between Russia and Germany via the Baltic Sea has come under increased scrutiny over the past year. The European Commission, the EU’s executive arm, has sought to impose EU regulations on the gas pipeline, fearing that otherwise Nord Stream 2 would undermine efforts to reduce EU dependence on Russian gas imports.

In November 2017, the European Commission proposed to amend the EU Gas Directive to ensure that “the core principles of EU energy legislation (third-party access, tariff regulation, ownership unbundling and transparency) will apply to all gas pipelines to and from third countries up to the border of the EU’s jurisdiction.”

In the factsheet accompanying the proposal, the EC said that “Pipelines in the EU area must be built and operated in accordance with all applicable legislation. Nord Stream 2 cannot happen in legal void or exclusively according to the law of a third country. If built, this pipeline would need a legal framework that takes into account the key principles of EU energy market rules.”

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However, the legal opinion of the Council of the European Union now deals a blow to the Commission’s efforts to have the third-party (Russian) pipeline to the EU regulated under EU laws.

The Commission’s proposal “lacks any reasoning on the regulatory power of the Union over offshore pipelines” that cross an EU nation’s exclusive economic zone (EEZ), according to the opinion dated March 1 and quoted by Reuters.

“The Union does not have jurisdiction to apply energy law...which is unrelated to the economic exploitation of the EEZ, to pipelines crossing the EEZ of Member States,” the Council’s legal service said.

By Tsvetana Paraskova for Oilprice.com

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