Russia: EU should adapt its legislation to the South Stream bilaterals

Ambassador Chizhov_4.jpg

The European Commission should adapt its internal legislation to the bilateral agreements Russia signed with six EU countries for building the South Stream pipeline, and not the other way around, Russian Ambassador to the EU Vladimir Chizhov said on Monday (13 January).

Speaking at a public event in Brussels, Chizhov said that his country would not negotiate with the Commission for the annulment or termination of the validity of intergovernmental agreements for the South Stream gas pipeline, signed with six EU member states and Serbia.

Last December, the Commission announced that the bilateral agreements for the construction of the Gazprom-favoured South Stream pipeline – concluded between Russia and other European countries – were in breach of EU law and needed to be renegotiated from scratch.

Gazprom and Russian officials clearly said Moscow had no intention of halting the construction of the pipeline. Russia considers the inter-governmental agreements valid under international law, which in its view has supremacy over EU law.

The six EU countries have signed inter-governmental agreements with Russia over South Stream – Austria, Bulgaria, Croatia, Greece, Hungary and Slovenia. Serbia, which is not a member state but is part of the EU-backed Energy Community, has agreed that the Commission should be their ‘advocate’ for adapting the bilateral deals to EU law.

According to Chizhov, if the six EU signatories have authorised the EU executive to negotiate on their behalf, then the talks should focus on the opportunities to adapt the EU’s Third Energy Package to the already signed agreements, rather than the opposite. The Third Energy Package aims to prevent firms that already dominate supply from also controlling distribution networks.

"I have full respect for those six EU member states that signed intergovernmental agreements with Russia, but they were aware of the possible complications. If they really assign negotiating powers to the European Commission, we will talk to the Commission, not about the agreements but on the possibility of adapting the third Energy Package to those agreements," the Ambassador said.

Chizhov said the Third Energy Package was "not the best invention of the EU" and added that most energy projects in the EU were based on derogations from this legislative package. Chizhov also questioned the scope of the rules, as they affected countries which were not an EU member state, like Serbia.

Russia's tactics have been likened to “divide-and-rule”, and appear to be working. If the six EU signatories to the South Stream bilaterals do not fulfill their obligations towards Russia, Moscow is expected to take the issue to the international court, where it will likely win, analysts say.

But if these six countries choose to proceed with the construction of the pipeline in the absence of a legal solution with the Commission, they are likely to face heavy infringement procedures and trials with the European courts.

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.
  • 17 Jan.: Meeting between Russian energy minister Alexander Novak and EU’s Energy Commissioner Günther Oettinger
  • 28 Jan.: EU-Russia summit.

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