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25/09/2016

Conflicting energy policies to be adopted at Ypres summit

Energy

Conflicting energy policies to be adopted at Ypres summit

Three soldiers walking down a bombed out street in Ypres, during WWI. [James Tworow/Flickr]

EXCLUSIVE/ The draft conclusions of the 26-27 June EU summit to be held partly at the World War I battlefield of Ypres make no concrete mention of South Stream. In fact, one of the texts could even be interpreted in favour of the Gazprom-sponsored gas pipeline, EurActiv has learned.

EU leaders are preparing for the 26-27 June regular summit, the first day of which will be spent in in Ypres for a ceremony to mark the centenary of the outbreak of World War I. The event will begin in the late afternoon, and will be followed by a dinner. The next day, leaders will hold working sessions in Brussels as usual.  

The commemorations this year of the centenary of World War I – still known as the “Great War” – are likely to reawaken the memories of a hesitant and divided Europe, reminiscent of its current handling of the Ukraine crisis. World War I began on 28 July 1914 and lasted until 11 November 1918. More than nine million combatants were killed. It was the fifth-deadliest conflict in world history, paving the way for major political changes, including revolutions in many of the nations involved.

At the 19 December 2013 EU summit, German Chancellor Angela Merkel said that she had read the book The Sleepwalkers: How Europe Went to War in 1914, by Australian historian Christopher Clark.

“They [the European countries’ leaders] failed everything, and this brought World War I,” she said. 

The 26-27 June summit is expected to make at least two decisions of geopolitical importance. The first is the expected signature of the Association Agreements with Ukraine, Moldova and Georgia.

>> Read: EU misses opportunity to sign Ukraine’s Association Agreement in Kyiv

The second decision is to discuss the Commission’s Energy Security Strategy (EEAS), aimed at reducing the European Union’s heavy energy dependence on Russia.

The current pricing dispute between Kyiv and Moscow is interpreted by pundits as a Kremlin strategy to cripple Ukraine’s economy and to promote the South Stream pipeline, which is aimed at bringing gas to the EU under the Black Sea, bypassing Ukraine.

According to the draft conclusions of the summit obtained by EurActiv, no major decisions are expected. Russia and the South Stream are not even mentioned. Russia is pushing for building the pipeline, even though a number of legal problems are plaguing the project. Bulgaria has started construction work, even though the European Commission has opened an infringement procedure over the issue.

EU Energy Commissioner Günther Oettinger has said the Commission-mediated talks to solve legal issues over South Stream could continue only if Russia adheres to international law in the context of the Ukraine crisis. He has also said that work on South Stream should be frozen until this happens.

>> Read: Oettinger: EU help in resolving South Stream’s legal problems is conditional

But the summit draft conclusions don’t enforce these strong statements. Instead, it is said that “EU internal market and competition rules must be adhered to by the energy infrastructure investments, including those promoted by third countries, and robustly enforced with a view to ensuring full compliance with the EU legislation and its energy security priorities.”

One of the sentences of the Conclusions could be even interpreted as if the European Union backed South Stream. The sentence reads:

“The EU will engage with its international partners to reduce the risk of disruption of natural gas delivery.” Russia presents South Stream as a project which precisely reduces the risk of disruption of gas deliveries through Ukraine, the latest one being the third in recent years.

>> Read: Russia cuts off gas, Ukraine secures borders

Although the document is only a draft and could be modified, it apparently reflects the national interests of member countries that are part of the South Stream project. Russia has signed intergovernmental agreements to build South Stream with Bulgaria, Hungary, Greece, Slovenia, Croatia, Austria and non-EU member Serbia. The final destination of the gas is Italy, and the key partner for Russia’s Gazprom in the South Stream project is Italy’s largest energy company, ENI.

Italian Prime Minister Matteo Renzi is reported to be spearheading efforts in support of South Stream, and the Bulgarian leadership has repeated many times that the project is of national interest for the country.

>> Read: Renzi leads belated effort in support of South Stream

One sentence in the conclusions appears as a warning to Serbia, an EU candidate country which is also on the route of the pipeline, to abide by EU law. The sentence reads:

“The Energy Community, which aims to expand the EU’s energy acquis to enlargement and neighbourhood countries, should be reinforced so as to ensure the application of the acquis in those countries.”

Background

South Stream is a Russian project for a natural gas pipeline. As planned, the pipeline would run under the Black Sea to Bulgaria, and continue through Serbia with two branches to Bosnia and Herzegovina and to Croatia. From Serbia the pipelines crosses Hungary and Slovenia before reaching Italy [see map]. Its planned capacity is 63 billion cubic metres per year (bcm/y).

The key partner for Russia's Gazprom in the South Stream project is Italy's largest energy company, ENI.

Russia signed intergovernmental agreements with:

  • Bulgaria – January 18, 2008;
  • Serbia – January 25, 2008;
  • Hungary – February 28, 2008;
  • Greece – April 29, 2008;
  • Slovenia – November 14, 2009;
  • Croatia – March 2, 2010;
  • Austria – April 24, 2010.

The proposed pipeline would arrive in Bulagaria, EU territory,  through the Black Sea. Last December, the Commission said that all inter-governmental agreements (IGAs) for the construction of the South Stream pipline, signed between Russia and Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria, are in breach of EU law and need to be renegotiated from scratch [read more].

At the G7 summit, Commission President José Manuel Barroso made it plain that the EU's executive had launched an infringement procedure against Bulgaria for non-compliance with European rules on energy competition public procurements. Other infringements procedures related to other countries would follow if other irregularities were not removed, he said.

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