EU to Boost Oversight of Russian Gas Contracts, Sefcovic Says

The European Commission will present next year a proposal to increase the oversight of natural gas contracts with Russia and other external suppliers, its energy union chief Maros Sefcovic said.

A draft law to ensure gas agreements between governments are in line with European Union rules will follow the endorsement in March for the measure from the bloc’s 28 nations, according to Sefcovic.

“We will see what will be the most efficient way to do that,” he said in an interview on May 7 in Brussels. “We can propose the European Commission representatives in the negotiating teams, we can propose close consultations when such negotiations are taking place or we can even consider that we would have some kind of standard clauses to make sure that the agreements are in compatibility with EU rules.”

The crisis in Ukraine highlighted the need for Europe to tighten energy links among member states and cut its dependence on Russia, which supplies 27 percent of the bloc’s natural gas. To ensure that intergovernmental agreements with Russia don’t breach EU law, the regulator should vet their content during negotiations and not just before deals are adopted, according to Sefcovic.

South Stream

In December, Moscow-based OAO Gazprom halted work on the South Stream pipeline, designed to bring gas directly to Europe under the Black Sea, after the commission called on nations involved in the project to ensure it didn’t violate EU rules.

The cornerstone of the European energy legislation seeks to make dominant power and gas companies improve access to transmission networks for competitors.

“We have seen how many problems we had with such agreements in he past,” he said. “Once agreements are signed and ratified it’s very difficult to change them. It creates a lot of legal uncertainty and political tension.”

The commission will have two streams of work: one on intergovernmental agreements and another on a revision of the security of gas supply law, which will address commercial contracts, Sefcovic said. EU leaders in March balanced the need to enforce European laws on gas purchases with concerns over confidentiality of contracts by endorsing a clause guaranteeing that commercially sensitive information can be kept secret.

The EU buys 53 percent of the energy it consumes from external suppliers at a cost of 1 billion euros ($1.1 billion) per day, according to the commission. Ten percent of the bloc’s natural gas supply is piped through Ukraine.

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