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28/09/2016

Member states challenge regional gas ‘solidarity’ plan

Energy

Member states challenge regional gas ‘solidarity’ plan

Operator in natural gas production industry.

[Shutterstock]

A European Commission proposal obliging EU countries to re-route gas supplies to neighbouring member states in case of severe shortages is being challenged for its excessive “rigidity” ahead of ministerial talks Monday (6 June).

The EU’s 28 energy ministers will meet in Brussels today to firm up their position on a package of gas security proposals put forward by the Commission in February.

Part of the discussion will focus on a draft regulation obliging EU countries to help each other in case of supply shortages. The executive said hospitals and other vital services in neighbouring countries should be prioritised over non-essential industries at home in the event of a supply cut.

This “solidarity principle” is part of the EU’s Energy Union policy which aims to reduce the bloc’s dependence on Russian gas imports while boosting renewables and energy efficiency.

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But some countries are now questioning the wisdom of the European Commission’s proposal, which cuts the EU into nine separate regions of neighbouring countries, based on proximity and ability to pool resources.

“The Commission wants lots of regional cooperation plans but has already decided which region member states should be part of,” said one senior diplomatic source from a large EU country.

This “seems rather rigid and bureaucratic,” said the diplomat, who was briefing reporters in Brussels ahead of the Monday meeting.

For example, Germany was placed in “a unique and exclusive regional cooperation with Poland,” the source explained, while France was grouped together with Benelux and the Iberian Peninsula.

“We have nothing against, but at the same time we have other forums to discuss gas supply security with other member states. We would like more flexibility, especially in cases where regional cooperation structures are already in place.”

Other issues relate to compensation for gas that is being re-routed to neighbouring states, in potential violation of contracts with private suppliers. “Gas is not the property of governments, so if we transfer it, this implies compensation mechanisms,” said the diplomat.

Central and South Eastern Europe

The concept of solidarity was championed by Bulgaria which promoted the view that each country should have at least three different sources of gas. A High Level Group on Central and South Eastern Europe Gas Connectivity was set up in July last year to improve gas linkages between Austria, Bulgaria, Croatia, Greece, Hungary, Italy, Romania, Slovakia and Slovenia.

Maroš Šefčovič, a Slovak who is Commission Vice-President in charge of the Energy Union, strongly supports the initiative.

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But other countries tend to share the view that the Commission’s regional plans are too rigid, according to a source in the Council of the EU, which represents the 28 nations in the bloc.

“This is no secret. Some member states think the pre-determination of regional cooperation zones is a bit rigid. Others are more favourable,” the Council source explained, adding “divergences” were understandable because of the “importance” of the text, which is legally prescriptive.

The Monday Council meeting will allow energy ministers to hold a first exchange on the matter and hopefully clear up a number of issues. “The regulation on security of supply is still being analysed and discussions are ongoing,” the source said, adding a joint position from EU member states could be expected in the Autumn, opening the way to negotiations with the European Parliament for a final agreement.

Background

The Energy Security Package, launched on 10 February, builds on the EU’s Energy Union strategy, which aims to bolster the bloc’s resistance to shortages and its fight against climate change.

The package includes a drat regulation on security of supply, which aims to help prevent and respond to potential supply disruptions if they happen. The Regulation:

  • Creates a common indicator to measure serious threats to gas security known as N-1. This indicator refers to a situation in which a very important national gas installation such as a production facility or pipeline falls out of operation.
  • Defines a supply standard that EU countries must prepare to meet even in the case of a disruption such as N-1. This standard means that countries must be able to supply at least 30 days' worth of gas to private households and other vulnerable consumers like hospitals.
  • Requires EU countries to designate an authority specifically responsible for the gas supply.
  • Requires the authority to create a Preventive Action Plan which assesses supply risks and proposes preventative measures such as investment in new pipelines.
  • Requires the authority to prepare Emergency Plans for dealing with a crisis. These plans should include specific procedures that come into effect during a disruption and ways to coordinate with other national authorities.
  • Sets up a Gas Coordination Group to coordinate actions and exchange information between national authorities and industry.

Timeline

  • Autumn 2016: Possible common position in the Council over proposed gas supply regulation.