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08/12/2016

EU energy boss says joint gas buying would have to be voluntary

Energy

EU energy boss says joint gas buying would have to be voluntary

Maroš Šef?ovi?

[Saeima/Flickr]

Member states can only work together to buy natural gas, as part of efforts to reduce Russia’s negotiating power, on a voluntary basis, the EU’s Energy Commissioner, Maroš Šef?ovi?, said on Monday (2 February).

The idea that EU countries could join forces to try to negotiate more favourable gas contracts with Russia’s Gazprom was put forward last year by Poland’s then prime minister Donald Tusk.

Tusk has since taken up an EU job as president of the European Council, which brings together the EU’s 28 heads of states and government.

On a visit to Warsaw, Maroš Šef?ovi?, a vice-president in the European Commission in charge of the Energy Union project, said many west European countries were opposed to the idea of working as a single EU gas buyer because they believed it breached competition and free-market rules.

The view was different in central and eastern Europe, where, he said, countries might be able to collaborate on a voluntary basis or in the event of a market failure or crisis.

But any negotiations based on “aggregation of demand” would have to be “in full respect of EU law and WTO (World Trade Organization) obligations”, he added.

Gazprom’s prices to Poland, which uses around 16 billion cubic metres (bcm) of gas annually, are among the highest in Europe. Poland’s largest gas distributor PGNiG, seeking cheaper prices, launched talks with Gazprom last November.

The European Commission has made energy union, based on better energy connections to share out available supplies and reduced reliance on imports of fossil fuel, a priority.

>> Read: Šef?ovi? tells MEPs he has a vision for EU’s Energy Union

But the project is being held up by numerous barriers to infrastructure investment. A report published in December by an EU Task Force on Investment identified regulatory, financial and political obstacles to the project, seen as vital to bolster the EU’s resilience to Russia using gas as a political weapon.

The report identified about 2,000 projects across the EU, worth €1.3 trillion of potential investments, from a list submitted by member states. They include infrastructure in transport, the digital economy, environment and social infrastructure, as well as energy.

>> Read: Barriers to infrastructure investment blocking Energy Union

Later this week, Latvia, holder of the EU presidency until the end of June, will hold a conference to kick off the debate ahead of official presentation later this month of the Commission’s vision of how energy union will work.

Background

When he was Prime Minister of Poland, Donald Tusk has spearheaded the idea of an EU energy Union.

The idea has since been taken up by the European Commission which nominated a special commissioner and vice-president, Maroš Šef?ovi?, to steer the project.

>> Read: Poland hopes Tusk will create an EU Energy Union

Poland has taken steps towards creating a gas trading and transit hub in Central and Eastern Europe aimed at shaking off its almost complete reliance on Russian gas imports.

Like much of Central Europe, Poland relies on Russia for nearly all its natural gas, a precarious situation for a nation whose uneasy relationship with Moscow has been further strained over the stand-off with Ukraine.

>> Read: Poland masterminds gas trading hub for Central Europe

Timeline

  • 25 February: European Commission expected to table plans for an 'Energy Union'

Further Reading

European Commission