The European Commission asked the Member States in July for a mandate to talk to Russia about the legal regime for the Nord Stream 2 project. Russians do not want to negotiate. The Commission has an alternative plan, i.e. the new law. It may jeopardize implementation of the investment.
Russia does not want talks about Nord Stream 2
– Russia will not negotiate Nord Stream 2 with the European Union. It is outside the competence of the Commission – said the permanent representative of Russia at the European Union. – We do not need this type of talks and they know that. Nord Stream 2 is a submarine gas pipeline running through neutral waters. The EC is the regulator only in the EU and does not have any extraterritorial rights. The pipeline is outside its jurisdiction – he added.
– We are ready to talk about Nord Stream 2 with the European Union, the African Union, and even with aliens, if they ask us about it, but there is nothing to negotiate. This is a commercial project, which is not regulated by any intergovernmental documents – Chizhov said. He also recalled that there was no consensus in the European Council on the Commission proposal, citing information from Commission President Jean Claude Juncker.
The Commission wanted to discuss with Russia the implementation of the “Key Principles” of EU law in the energy sector (Third Energy Package), such as access to independent suppliers, owner distribution, independent operator. The pipeline is expected to start its operation in 2019. Although preparations are underway, its construction has not yet started, because in addition to the legal dispute with the EC, it is threatened by the specter of US sanctions and the Danish regulation, which may hamper the construction by blocking the section in its territorial waters.
Chizhov’s message is reinforced by Katja Jafimajev of the Oxford Institute for Energy Studies in London. In her opinion, Nord Stream 2 will be established irrespective of whether the Commission will be given a mandate to negotiate. “The pipeline will come into being, but the mandate and change of law may affect its operation” – an analyst from the center that was accused by the Free Russia organization of being influenced by the Russian Gazprom, said to the RIA Novosti agency.
European Commission Plan for Nord Stream 2
The Commission has a plan in case the negotiation is impossible. It considers changing the definition of interconnector, allowing to subordinate the Nord Stream 2 pipeline to the law. It is criticized, particularly in Central and Eastern Europe, as it might consolidate the position of the Russian Gazprom, hindering the EU’s policy of reducing dependence on supplies from one source and hampering market development by undermining the viability of alternative projects such as the LNG terminal in Świnoujście or the postulated Norwegian Corridor – Baltic Pipe. We wrote more about it at BiznesAlert.pl.
Nonetheless, supporters of the project say that Nord Stream 2 will contribute to a decrease in gas prices, greenhouse gas emissions and investment growth in the European Union. – This is a European project – they argue. Investment dispute increases the risk for Gazprom’s financial partners, which is the sole shareholder of Nord Stream 2. A part of the five European companies signals that new barriers can increase the cost of loans.
Had the project been subordinated to EU law, this could force a change in Russian law, which now gives Gazprom the exclusive right to export gas through pipelines. In order to allow other suppliers, Russians would have to reform these regulations, provided that they would agree to do so. In case of disagreement the project could not be implemented.