Speaking to a group of journalists yesterday (19 April), Commission Vice-President Maroš Šefčovič, in charge of Energy Union, shed light on the ongoing negotiations to reconcile the Nord Stream 2 pipeline project with EU legislation.
In previous meetings, Šefčovič had expressed concern that the project was not in conformity with the Energy Union’s goals.
The project is facing heavy criticism from Central European countries, the US and Ukraine, which fears losing its role as a transit country.
This time, the Commission Vice-President sounded more upbeat.
“I’m glad to say we see some evolution in discussing this topic,” he said. But Šefčovič admitted that the battle was not yet won.
“This project, as it was described and presented, is polarising EU member states […] “I’ve never seen a project that was heralded as a purely commercial one so intensely politically debated, not only by the ministers of energy, but also by the ministers of foreign affairs and by the heads of state and government, and we never received so many letters from the highest representatives of our member states,” Šefčovič said.
The bigger picture
In terms of approach, it appears that the European Commission is trying to grasp the big picture, before it is ready to make an assessment.
“We need to deal with [this issue] in a larger scope. We spent a lot of time assessing the legal aspects, but I think we now enlarge the debate to address other questions or concerns, especially in the area of the energy security, and functioning of the market. It raises question marks about how much gas do we really need for 2030,” Šefčovič said.
He added that the Commission had its own estimates, which are between 370 to 380 billion cubic metres (bcm) to 440-450 bcm a year.
“These estimates have been contested by some as being too high. We approached the International Energy Agency to provide additional expertise. We asked our gas transmission operator, ENTSOG, not only to look at what is their estimate, but what is the most cost-efficient way to get it,” he said.
Šefčovič also referred to the cost of the upgrading of the Ukrainian gas transmission infrastructure as a part of the equation.
“When you look at estimates how much it would cost to renovate the Ukrainian transit route, there is a figure you can hear mostly from Russia, between $10 to $12 billion, while studies by the World Bank which estimates the cost between $2.5 and $5.5 billion,” he said.
He referred to recent statements by the German side that Nord Stream 2 will only go ahead if Russia does not cut off gas flows to Ukraine and Eastern Europe.
“I’m very glad to hear from the German representatives that the transit route through Ukraine needs to be maintained, and that the situation in Central Europe should not be negatively affected. These are new elements,” Šefčovič said.
‘Avoiding legal void’
Regarding the most important issue – the Commission’s legal assessment of the conformity of the project with EU law, he indicated that progress had been made in talks with the Nord Stream 2 consortium and the German regulator Bundesnetzagentur,
“We also progressed with our legal assessment. I presented my preliminary findings after having several sessions at expert level [with the Consortium and with the German regulator] on this issue. “Our understanding is that we need to avoid legal void for such a project. EU law in principle should apply to all EU territory, including exclusive economic zones. When it comes to direct application of the sectorial EU law, we have to look which parts of it should be applicable to this project, and what kind of approach we would propose so that core principles of EU energy law and EU energy policy will be safeguarded,” Šefčovič stated.
Asked about the offshore part of the pipeline, he said that it was important to assess which parts of EU laws are applicable. “As regards specific secondary EU legislation, there has to be a case by case check what areas of the legislation should be applied to the pipeline.”
He mentioned environmental law, for which the Commission had “no doubt” that it should be applied. Another issue was the public procurement legislation. Regarding the Third energy package, he said it should be clearly applied on the onshore part.
“Here we are at the collision of legal orders – Russian and European, so we think the best to address this collision would be to develop framework where the core principles of the EU would be properly safeguarded,” the Commission Vice-President said.