European Parliament approves new EU gas market rules

The European Parliament has approved a new European Union (EU) directive drafted to extend EU gas market competition rules to pipelines that enter the EU from non-member states, writes Keith Nuthall. The legislation may impose conditions on the operation of the Nord Stream 2 pipeline from Russia to Germany, and should the UK quit the EU as it currently plans, the law would apply to pipelines linking the UK with the remainder of the EU.

A key part of the directive is that the ownership of such pipelines entering EU territory must be unbundled – separated from the companies supplying gas to this infrastructure. Moreover, these pipelines must be made accessible to other operators, as EU law already calls for intra-EU gas pipelines.

That said, the new directive – already approved by EU ministers and hence now coming into force – does allow a member state supplied by such a pipeline from a non-EU country to waive these unbundling commitments for a renewable term of 20 years. However, this can only happen if ‘the derogation would not be detrimental to competition on, or the effective functioning of, the internal market in natural gas, or to security of supply in the European Union’. Such an exemption may be made subject to conditions delivering these goals. Furthermore, they cannot be applied to European Economic Area countries such as Norway or EU Energy Community members such as Ukraine. 
These guarantees were enough to attract the support of MEPs concerned about Russian control of pipelines entering the EU.

The Polish centre-right MEP who coordinated votes in the parliament on the directive, Jerzy Buzek, said: ‘Many profit-oriented stakeholders wanted to see these negotiations fail as, without this agreement, EU rules would not apply to gas pipelines from non-EU countries.’ In his view, the directive means that ‘all gas pipelines from non-EU countries, including Nord Stream 2, will have to abide by EU rules – third-party access, ownership unbundling, non-discriminatory tariffs and transparency’. 

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