Division in EU proposed pipeline regulations

On November 8, 2017 the European Commission proposed a new anti-monopoly law that would expand existing legislation – which would constraint companies to build, own and transport its own natural gas through a single pipeline on offshore pipelines importing natural gas into European territory.

The Gazprom’s controversial Nord Stream II pipeline is a key component of that strategy, and if constructed, it would boost Russia’s ability to send natural gas directly to Germany. The Nord Stream II would also double the capacity for Russian pipelines under the Baltic Sea that land in Germany.

Construction of the pipeline is expected to start this year and be completed by 2019. The new pipeline will be able to send 55 billion cubic meters of natural gas per year.

The European Union has voiced its desire to diversify its energy ties to minimize their dependence on Russian energy. The prospect to have a legislation in place is far from certain. The new legislation needs to be approved by the European Parliament, as well as the Council of the European Union with a qualified majority. Several European countries are going to support the bill because of the financial ramification. Several energy companies have pledged to finance the project through a loan of 950 million euro, making up a combined half of the project’s estimated costs.

The opponents of the project such as Poland are expected to support the legislation, which would place limitations on the pipeline. Poland anti-competition laws have already forced many of Gazprom’s partners to pull out of the project. According to the proposed law, Gazprom, the Russian state controlled gas monopoly slated to build the pipeline be barred from operating it. Germany would be allowed to negotiate the pipeline deal with Russia. The European Commission would be able to negotiate on behalf of member states.

The proposal law could affect pipelines coming from Algeria, Libya, Morocco, Norway, Russia, Tunisia and potentially the United Kingdom after Brexit.