The bilateral agreements for the construction of the Gazprom-favoured South Stream gas pipeline – concluded between Russia, Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria – are all in breach of EU law and need to be renegotiated from scratch, the European Commission said Thursday.
Speaking in the European Parliament, Klaus-Dieter Borchardt, director for
energy markets at the European Commission, said the deals were in breach of EU
law.
"The Commission has looked into these intergovernmental agreements and came to
the conclusion that none of the agreements is in compliance with EU law,"
Borchardt said.
"That is the reason why we have told these states that they are under the
obligation, either coming from the EU treaties, or from the Energy Community
treaty, that they have to ask for re-negotiation with Russia, to bring the
intergovernmental agreements in line with EU law,” he added.
The development comes at a moment of heightened sensitivity in EU-Russia
relations. Last week European heads of state were dismayed by the decision of
Ukrainian President Viktor Yanukovych to reject the signing of a partnership
agreement that would bond relations between the former Soviet state and the EU.
Instead, Yanukovych has signalled Ukraine will bind itself closer to Russia,
triggering mass protests at home in favour of closer ties with Europe.
Russian deals out of the window
The parliament event where Borchardt spoke was attended by high-level
representatives, including Russian deputy minister for energy Anatoly
Yankovski, Gazprom’s director-general for export Alexander Medvedev, and
Serbian energy minister Zorana Mihajlović.
Borchardt explained that if these negotiations are not successfully conducted,
then these countries had to denounce their agreements with Russia.
He explained that the EU's Energy Commissioner, Günther Oettinger, had just
sent a letter to Russian energy minister Alexander Novak explaining the
situation and asking him "to look positively” into the possibility of
re-negotiating the deals with the countries concerned.
These include EU members Bulgaria, Hungary, Greece, Slovenia, Croatia and
Austria, as well as Serbia, which is a member of the Energy Community, an
EU-backed international agreement covering former communist countries of
Eastern Europe.
"What I can say is the intergovernmental agreements will not be the basis for
the construction or the operation of South Stream. Because if the member
states or states concerned are not renegotiating, then the Commission has the
ways and means to oblige them to do so. And South Stream cannot operate
under these agreements,” Borchardt insisted.
Three conditions
The Commission official highlighted at least three major issues about the
deals:
First, the EU's so-called network ownership 'unbundling' rules need to be
observed, he said. This means that Gazprom, which is both a producer and
a supplier of gas, cannot simultaneously own production capacity and its
transmission network;
Secondly, non-discriminatory access of third parties to the pipeline needs to be ensured. There cannot be an exclusive right for Gazprom to be the only shipper; and
Thirdly, the tariff structure needed to be addressed.
"Is it possible to bring in line the construct of South Stream and the
operational part of South Stream with these rules? I don’t know. I don’t
know yet ,” the official repeated.
But even if negotiations are successful, work to accommodate South Streamwith EU concerns would take time, Borchardt warned.
"Not months, maybe two years before we get there," he said.
Exemptions may be in the distant future
Exemptions from unbundling obligations are not ruled out, the official said.
But such a window of opportunity would open up only when gas capacities would
start to be allocated to the different segments of the pipeline, he explained,
adding that such a moment would take place only in the remote future.
"It will not be an easy task; it needs a lot of mutual understanding, maybe
also some new ideas that are not yet discussed. But I have to say in all
openness and frankness that the South Stream pipeline will not operate
on the territory of the EU if it is not in compliance of our energy law,” Borchardt
stressed.
Asked by EurActiv to reveal when the Commission had made the announcement to
the EU countries concerned, Borchardt said this took place in several steps.
First, the EU executive had asked them to send to Brussels their
intergovernmental agreements which were subsequently analysed by Oettinger's
services. He said he had personally chaired a meeting on 18 October, at which
he also invited a Gazprom representative, and that the countries were
well aware of the situation since.
"They are fully informed of what I said today,” Borchardt
assured.
'First welding' ceremonies
The Commission's announcement may embarrass at least two South Streamtransit countries.
Bulgaria, which opened its doors to South Stream in April 2012 under a
previous government, hosted a South Stream "first welding” ceremony on 4
November, in the village of Rasovo in the Montana municipality of Bulgaria,
near the border with Serbia.
And Serbia did the same on 24 November in the village of Šajkaš, in Vojvodina.
Both countries reportedly knew that they were promoting a project under
agreements seen by Brussels as illegal.
Asked about the timeframe to re-negotiate the agreements, the Commission
official remained vague. The first step, he said, is for the EU countries concerned
to ask for a re-opening of the intergovernmental agreements with Moscow.
Borchardt said the EU Executive hoped that Moscow would look at this
positively.
But Russia has apparently no intention of re-opening those deals. Speaking at
the event, Gazprom’s Medvedev stressed that "nothing could prevent the
construction of South Stream”.
Borchardt replied by saying: "What the Commission would hardly accept is that
you put to us a pipeline that is built, that’s in the landscape, and then
handing over the baby to us and say – now it’s up to you, Commission, to find a
solution how can we operate it."
Russian deputy minister for energy Anatoly Yankovski, who delivered a prepared
speech shortly afterwards, said that Russia does not accept that EU rules should
apply to trans-boundary projects such as pipelines, which are not stationed
solely on EU territory.
He added that EU law could not prevail in EU-Russia relations, which are
governed only by international law. In other words, the intergovernmental agreements
concluded by Russia over South Stream were prevailing over other legal
norms, Yankovski said.
(euractiv.com)
