EU leaders to debate plan for closer oversight of gas contracts

By EWA KRUKOWSKA
Bloomberg

The European Union’s plan for closer oversight of gas contracts under the proposed energy union may trigger a “lively debate” at the EU summit next week, according to Poland.

EU heads of state are due to hold on March 19-20 their first talks about a proposal by the European Commission, the EU’s regulatory arm, to develop closer energy ties among the bloc’s 28 nations.

Some elements of the plan, such as transparency of energy deals and the involvement of the commission in the negotiations with suppliers, have already led countries including Germany and Hungary to voice their concerns.

“The commission proposal should be largely uncontroversial because it puts forward the ideas with which most of the member states agree, but of course the devil is in the details,” Polish Deputy Foreign Minister Rafal Trzaskowski told reporters in Brussels today. “There’s no single member state that would say we do not need more transparency. But the question is what we mean by that.”

While EU leaders are set to endorse the idea of the energy union, they may also give more indication on how it should be translated into detailed law, according to Trzaskowski. The proposal presented by the commission on Feb. 25 calls for strengthening cross-border gas and power links, removing market barriers, helping the shift to a low-carbon economy and diversifying energy supply sources.

“We have to bring together the 28 energy markets into a single energy union,” European Commission President Jean-Claude Juncker told members of the European Parliament today. “We import 53 percent of energy that we consume and that comes with a cost -- 400 billion euros ($423 billion) per year. We spend more than 1 billion euros per day importing energy and we’d do better to save those amounts.”

Ukraine Crisis

The Ukrainian crisis has highlighted the need for Europe to cut its energy dependence on Russia, which supplied 27% of the bloc’s natural gas last year.

To increase transparency in gas negotiations with Russia and other trade partners, the commission proposed being involved in talks and overseeing planned agreements to ensure they are compatible with EU law. In December, Moscow-based OAO Gazprom halted work on the South Stream pipeline, designed to bring gas directly to Europe under the Black Sea, after the commission called on nations involved in the project to ensure it didn’t breach EU rules.

The commission’s energy union proposal would require involving the EU in bilateral relationships, according to Hungarian Prime Minister Viktor Orban. “For us, this would be abdicating our sovereignty,” he told reporters on Feb. 18.

German Reservations

Germany has “reservations” about the proposed oversight of planned agreements, the country’s economy ministry said on Feb. 27. “That would unnecessarily restrict the negotiation freedoms of member states and private companies,” the ministry said in an e-mailed response to questions.

Poland supports the commission’s proposal, according to Trzaskowski. The central European country, which is dependent on Russia for around 60% of its gas needs, also seeks more transparency on gas prices and supply conditions.

“That’s not to say that all the secret details of every deal should be published, because that is a no-go for many, but the commission should have tools in order to aggregate that and show the median numbers,” Trzaskowski said. “That would make it much more difficult for external suppliers to dictate and divide countries according to non-economic assessment.”

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