Europe tightens rules on natural gas pipelines

An amended measure extending to all pipelines could offer room for geopolitical maneuvering.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  Nov. 8, 2017 at 7:42 AM
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Nov. 8 (UPI) -- The European Commission said Wednesday it was clarifying gas pipeline rules in order to ensure its energy market is competitive and transparent.

European natural gas production is on the decline, leaving the broader energy market vulnerable to export markets. Russia is the largest gas exporter to Europe and most of that gas runs through Soviet-era pipelines in Ukraine, where geopolitical issues create risk.

The European Commission said an integrated and competitive gas market was a foundation of the regional energy policy. In amending a gas directive, the commission said it was ensuring all pipelines entering into European territory are operating transparently and efficiently.

The measure, the commission said, was aimed at increasing competition between natural gas suppliers and boosting energy security in the European Union.

"Ensuring that all major pipelines wholly or partly located in EU territory are operated efficiently under a regime of transparent regulatory oversight will diminish conflicts of interests between infrastructure operators and gas suppliers, and guarantee non-discriminatory tariff setting," the commission stated.

Russia accounts for about 40 percent of the gas sent to the European market, followed by Norway with 34 percent. Liquefied natural gas, which is less exposed to geopolitical risk than piped gas, accounts for only 14 percent of the European market.

The measure could complicate Russian plans to twin the Nord Stream pipeline system, which runs through the Baltic Sea, and crosses into European territory before it makes landfall in Germany. Europe in general is worried about competition when it comes to Russia as gas company Gazprom controls both the pipeline networks and the supplies.

Shale natural gas from the United States, meanwhile, has made its way to the European market in the form of LNG. Polish Oil & Gas, known by its acronym PGNiG, this year closed on a deal to accept LNG from Cheneire Energy, which owns a terminal in Louisiana that's the only one with the permits necessary for current exports of U.S. natural gas.

When the U.S. State Department in late October published a list of 39 sanctioned Russian companies and entities, Russian Foreign Minister Sergei Lavrov said it was a veiled effort "to elbow Russia out of the energy markets."

A profile of European energy demand from commodity pricing group S&P Global Platts predicted the "biggest shift" in the regional market would come in the growing volumes of LNG.

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