Gas Directive amendments affecting Nord Stream 2 approved by EU Council

Gas Directive amendments affecting Nord Stream 2 approved by EU Council

The EU Council approved the amendments to the Gas Directive on the undersea parts of pipelines, including Russia’s Nord Stream-2.

"The Council today [April 15] formally adopted an amendment to the so-called gas directive which aims at closing a legal gap in the EU's regulatory framework and boosting competition in the gas market. This is the final step in the legislative process," the Council's press release said.

According to the materials of the Council, the amendments were passed without discussion. The changes will enter into force 20 days after the date of their publication in the EU's official press. The EU states have nine months to incorporate the new rules into their national legislation.

"The overall objective of the amendment to the gas directive is to ensure that the rules governing the EU's internal gas market apply to gas transmission lines between a member state and a third country, up to the border of the member state's territory and territorial sea," the press release added.

The European Parliament passed the amendments on April 4. They stipulate that the existing and future pipelines cannot be operated by the same company that produces the fuel.

A leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, speaking to Vestnik Kavkaza, noted that the updated EU Gas Directive is a de facto sanction against Nord Stream 2. "The European Union does not want to officially impose sanctions in order not to get a negative reaction from Gazprom, so Brussels found a way out in adopting antitrust laws restricting Nord Stream 2. Now, Gazprom will have to turn the last section to a separate project under the management of an independent operator. It will also face a problem with loading the pipeline at full capacity, as the Gas Directive requires that 50% of its capacity should be reserved for an alternative supplier," he explained.

“For its part, Gazprom will argue that there is no alternative supplier or LNG plant at sea where the European part of the pipeline starts, that is, competition is impossible. In this regard, the amendments to the Third Energy Package cannot be applied to the Nord Stream-2. I think that by adopting this document, the EU wants to prevent Gazprom from loading Nord Stream-2 for a certain period," Igor Yushkov said, adding that the new directive does not affect implementation of the European part of the Turkish Stream.

A senior analyst of 'Uralsib', Alexei Kokin, noted that the impact of the new Gas Directive on Russia's gas pipeline projects in Europe is not so clear. "Everything will depend on how the approval mechanism of new projects and existing pipelines will be applied. In practice, the position of influential EU members will decide. It is not yet clear that these difficulties will be able to block Nord Stream 2," he believes.

"Now, if any EU countries consider that a project threatens their security or gives Gazprom too strong negotiating position, they will have more opportunities to block such a project - but it is not clear how exactly the new directive will work. The main risk for Nord Stream 2 is being underloaded, it should be bypassed through a consensus that will allow Gazprom to use its full capacity, but it poses no risks for the European part of the Turkish Stream," Alexei Kokin concluded.