Europe Wants Regulatory Talks With Russia on Nord Stream 2 Pipeline

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Commission (EC) has called for a mandate to open negotiations with Russia on establishing a regulatory framework for the proposed Nord Stream gas pipeline.

The Commission said that it wants to ensure that the Russian-led project operates in a "transparent and non-discriminatory way" with an appropriate degree of regulatory oversight, in line with key principles of international and European Union (EU) energy law.

"As any other infrastructure project in the EU, Nord Stream 2 cannot and should not operate in a legal void or according to a third country's energy laws only," explained Commissioner for Climate Action and Energy, Miguel Arias Cañete. "We are seeking to obtain a Council mandate to negotiate with Russia a specific regime which will apply key principles of EU energy law to Nord Stream 2 to preserve the functioning of the European internal energy market".

Vice-President for Energy Union Maroš Šefčovič added: "Creating a well-diversified and competitive gas market is a priority of the EU's energy security and Energy Union strategy. As we have stated already several times, Nord Stream 2 does not contribute to the Energy Union's objectives. 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."

Nord Stream 2 is seen as essential to Europe securing additional gas supplies from Russia, which already supplies more than a third of the region's total. It will feature 1,220-kilometre (km) twin pipelines that will have a total capacity of 55 billion cubic meters of gas, effectively doubling the capacity of the existing Nord Stream strings, which were commissioned in 2011 and 2012. The gas will travel from Russian gas reserves to European consumers from the Russian coast via the Baltic Sea to Greifswald in Germany. Nord Stream 2 will largely follow the route and design of the successful Nord Stream pipeline.

The EC's move has been criticised by project developer Russia's state-owned oil and gas giant OAO Gazprom (PINK:OGAZPY) (Moscow), as well as Russia's Energy Minister Alexander Novak.

"First of all, it is a commercial project," Novak said. "Everything depends on how the investors will position themselves on this issue. We see with regret the desire to interfere with the agreements between commercial companies and to decide the future of key infrastructure projects without clear criteria."

Nord Stream 2 AG, Gazprom's subsidiary overseeing the project, said in a statement: "A specific framework just for Nord Stream 2 would discriminate against an individual commercial investment, based on political sentiment. It is unacceptable that among other comparable pipeline projects the European Commission, as the guardian of the EU Treaties, has singled out Nord Stream 2 for a special political treatment. This infringes against the principle of equal treatment, which is a constituting element of the EU Founding Treaties."

Last month, Industrial Info reported that five European energy companies pledged to invest up to 5 billion euro ($5.4 billion) in the Nord Stream 2 pipeline project. For additional information, see May 1, 2017, article - Contracts Signed for Nord Stream 2 Pipeline.

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