The EU last week called on its 28 member states to give it a mandate to negotiate a “special legal framework” with Moscow to cover the controversial Nord Stream 2 project, the second gas pipeline that Russia and a group of Western energy companies have begun laying along the bed of the Baltic Sea.
The project has divided the EU membership, with Poland, the Baltic states and others arguing that it would increase EU dependence on Russia’s Gazprom, which already supplies about a third of the bloc’s gas. The head of the European Council, Poland’s former Prime Minister Donald Tusk, has also waded into the dispute and has written to the EC saying the plan would be harmful to the bloc’s interests and runs contrary to EU plans to diversify its energy supplies.
Backers – including Germany – maintain that it is a purely commercial issue and will help reduce energy prices, but Energy Union vice president Maroš Šefcovic begs to differ: “Creating a well-diversified and competitive gas market is a priority of the EU’s energy security and Energy Union strategy,” he said this week. “As we have stated already several times, Nord Stream 2 does not contribute to the Energy Union’s objectives. If the pipeline is nevertheless built, the least we have to do is to make sure that it will be operated in a transparent manner and in line with the main EU energy market rules.“
Nord Stream 2 AG, the special purpose company behind the project whose majority shareholder is Gazprom, has reacted with dismay to the development and insists that negotiations are unnecessary. “The German regulator already confirmed that there is no legal void that needs to be addressed,” it said in a statement.
While the political case against the project largely revolves on the effect it would have on Ukraine’s economy by virtually eliminating its gas transit revenues, legally it centres on stipulations laid out in the EU’s Third Energy Package that the gas suppliers cannot also own the pipeline itself. Set to run from the Russian coast along the Baltic Sea bed to the German shore, the project team insists that the legislation does not apply to the offshore section that lies outside the EU’s jurisdiction, while its opponents argue that there is a legal void that needs to be filled.
The new pipeline is expected to come into service by the end of 2019 and to double existing capacity.