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Gazprom wants special case for its pipelines from EU energy package

Gazprom wants special case for its pipelines from EU energy package
Gazprom wants its two major projects – South Stream and Nord Stream – to be granted exceptions from the EU third energy package, seeking to retain control over their transportation capacity.

A new version of an agreement on transnational energy transportation projects will be handed over to the  European Commission on Friday during a Russia-EU summit on energy issues, Russia’s Energy Minister Aleksandr Novak said on Monday. The agreement should regulate South Stream and Nord Stream projects instead of the third energy package which is criticized in Russia.

The main principle of the EU third energy package signed back in 2007 is equal access of all participants to infrastructure, which Gazprom is seeking to avoid. According to the document, a company supplying gas or electricity shouldn’t completely own the transportation pipelines, as it leads to artificial over-pricing.

At the moment Gazprom is seeking exceptions for its South Stream and Nord Stream pipelines with their branch pipelines OPAL and NEL, Russia’s Energy Minister Aleksandr Novak explained. Russia plans to produce its new project agreement on cross-border pipelines during the 30th Russia – EU Summit on December 21, according to Novak. German Chancellor Angela Merkel has already promised Russia’s President Vladimir Putin to support the Russian initiative.

Under the third energy package, “delivering the necessary market volumes to the EU borders, we now can’t account for the adequate transport capacity,” Vedomosti daily quotes Gazprom CEO Aleksey Miller as complaining.

The legislative base for Russia – EU cooperation doesn’t deal with projects that have construction work beyond EU territory in so-called “third countries” that “aren’t obliged to implement European legislation,” Novak explained to Vedomosti.

The third energy package “is far from being perfect” and the EU “will keep on modifying its energy legislation in the near future,” Novak added. In the meantime, “we need to realize the project now, independently from the long term plans of European lawmakers,” Novak added.

Russia wants its South Stream project to be given the status of a cross-border project, the Energy Minister said. To get that, the countries where the pipelines go need to attribute national satuts to the project, which Bulgaria and Hungary had already done. Now Russia hopes that Serbia, Slovenia, Italy and Croatia will follow the lead.

At the same time if a pipeline goes through the territory of two or more countries, the owner country can ask for an exception from the general rules of the third energy package, according to the representative of the Energy EU commissioner talking to Vedomosti. The OPAL branch pipeline, joining Germany and the Czech Republic, already has such an exception, the representative says. If Gazprom reserves above 50% of the pipeline capacity, it should guarantee that it’ll supply at least 3bn cubic meters of gas to the Czech market. At the same time no exceptions were made for NEL pipeline all of which lies within the borders of Germany.

The exempt status of the European parts in Nord Stream and South Stream could be possible, only if Russia calls off its ban on international gas transit through its territory, concluded Michael Korchyomkin, director at East European Gas Analysis.