European Commission sets up three coditions for ''illegal'' South Stream


The bilateral agreements for the construction of the Gazprom-favoured South Stream gas pipeline are all in breach of EU law and need to be renegotiated from scratch, the European Commission said on December 4.

But even if negotiations are successful, work to accommodate South Stream with EU concerns would take time, director for energy markets at the European Commission Klaus-Dieter Borchardt warned. "Not months, maybe two years before we get there," he said.

The bilateral agreements for the construction of the Gazprom-favoured South Stream gas pipeline are all in breach of EU law and need to be renegotiated from scratch, the European Commission said on December 4. But even if negotiations are successful, work to accommodate South Stream with EU concerns would take time, director for energy markets at the European Commission Klaus-Dieter Borchardt warned. "Not months, maybe two years before we get there," he said.

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

Thirdly, the tariff structure needed to be addressed

The Commission's announcement may embarrass at least two South Stream transit 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. 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.

Adapted from Standartnews

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