France ‘steps on the gas’ in eurobudget talks

File photo. Construction work takes place on the Nord Stream natural gas pipeline near Luebesse, Germany, 14 April 2011. [Jens Buettner/EPA/EFE]

France made surprising back-and-forth moves on Nord Stream 2, which could be explained by the country’s effort to secure German and Dutch support in a completely different dossier.

On Thursday (7 February) France surprised everyone by breaking ranks with Germany on the important dossier of Nord Stream 2, just ahead of a crucial vote on amendments to the Gas Directive. Without French support, the whole project would stop being bankable.

Nord Stream 2 in dire straits after French U-turn

France plans to back an EU proposal to regulate Russia’s Nord Stream 2 pipeline, its foreign ministry said on Thursday (7 February), potentially threatening its completion and dealing a blow to Germany which has been trying to garner support for the project.

Surprisingly again, on Friday, France returned to the status quo ante. Now both Paris and Berlin agree to ensure that oversight will come from the “territory and territorial sea of the member state where the first interconnection point is located,” according to a copy of the draft obtained by AFP.

The draft text replaces the older wording stating the EU rules on gas imports will be applied by “the territory of the member states” and/or the “territorial sea of the member states”.

The draft compromise was submitted to a meeting of the EU ambassadors discussing a revision of gas market rules for the 28-nation bloc, diplomats said.

Nord Stream 2 faces opposition from many countries in eastern and central Europe, the United States and particularly Ukraine, because it could risk increasing Europe’s dependence on Russian natural gas.

Combined with the planned Turkish Stream pipeline across the Black Sea, Nord Stream 2 would mean Russia could also bypass Ukraine in providing gas to Europe, robbing Moscow’s new foe of transit fees and a major strategic asset.

The draft compromise addressed the concerns saying: “We consider a [gas rules] directive in this spirit indispensable for a fruitful discussion on the future gas transit through Ukraine.”

Preserving some transit via Ukraine is very likely, although negotiations are still ongoing.

Trilateral gas talks: A realistic approach towards ship-or-pay is needed

Despite new projects such as Nord Stream 2 and Turkish Stream, the transit of gas via Ukraine will continue, and the modalities need to be agreed, writes Danila Bochkarev.

A French diplomatic source had told AFP on Thursday that Paris was “not for or against Nord Stream 2”.

But the source said France sought “guarantees for the security of Europe and for the security and stability of Ukraine”.

Bargaining chip

A diplomat from a country from Eastern Europe told EURACTIV that the explanation behind the French back-and-fourth had nothing to do with gas.

On Monday, Eurozone ministers will discuss for the first time the plans for a Eurozone budget, a subject of major importance for Paris. The Council website says that “ministers will hold a first exchange of views on the way forward regarding the budgetary instrument for convergence and competitiveness for the euro area and ERM II member states on a voluntary basis”.

The December Euro summit mandated the Eurogroup to start work on the Eurozone budget, on a voluntary basis and as part of the EU long-term budget.

One of the major issues to be discussed is the Eurozone budget size.

The Netherlands has been the most skeptical Eurozone country regarding the idea of a Eurozone budget, but it is also the country most interested to access Russian gas via Nord Stream 2, as it is phasing out its domestic gas production.

The construction of Nord Stream 2 is already well advanced. The investors are Germany’s Wintershall and Uniper, Dutch-British Shell, France’s Engie and Austria’s OMV.

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