European Commission formally asks for mandate on Nord Stream

By bne IntelliNews June 11, 2017

The European Commission formally requested on June 9 a mandate from EU member states to negotiate over the rules of operation that would apply to Russia's Nord Stream 2 gas pipeline.

The controversial project continues to divide the EU. Nord Stream 2 would double the current 63bn cubic metres running beneath the Baltic Sea directly to Germany along the route, circumventing Ukraine and other Central & Eastern European countries.

Poland and other hawkish states complain the project stands to increase dependence in the region on Russian gas. Meanwhile, Kyiv stands to lose billions in transit fees. However, the new line is supported by Berlin. German companies Uniper and Wintershall are part of a consortium of Western European energy giants that has agreed to finance half of the project's costs of €9.5bn.

The commission said several months ago that it would seek a mandate to talk with Russia to make sure the project operates “in line with key principles of international and EU energy law”. On top of the fact that the strongest state in the EU supports the project, the bloc has struggled to find a solid legal footing to block Nord Stream 2. The tactic now is to seek to forge an agreement on operating terms with Russia.

“Nord Stream 2 does not contribute to the Energy Union's objectives," commission Vice-President for Energy Union Maros Sefcovic said in a statement. "If the pipeline is nevertheless built, the least we have to do is to make sure that it will be operated in a transparent manner and in line with the main EU energy market rules.”

President of the European Council Donald Tusk also recently waded into the discussion, urging the European Commission to exercise strict regulation of the Russian project on which he has a “negative view”.

Brussels is not without leverage, however. Russian gas exporter Gazprom is fighting to reach an out-of-court settlement with the commission over claims the company has habitually abused its market position in CEE. Gazprom has proposed to implement measures to address the EU’s concerns, but countries like Poland and Lithuania are pushing to have the Russian supplier fined and forced to reorganise its business.









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