To provide legal clarity for operators and competitive gas supply for all Europeans, MEPs approved new gas market rules to bring incoming pipelines under EU law.

MEPs adopted an overhaul of EU gas market rules on Thursday with 465 votes to 95, and 68 abstentions to extend EU rules (including EU competition rules) to all pipelines entering the EU from non-EU countries.

A more competitive EU gas market to benefit consumers

The amended rules will create a more competitive EU gas market by making sure that the ownership of pipelines entering EU territory is separate to that of gas supply. Pipelines must become accessible to other operators, as is already the rule for internal EU gas pipelines. Consumers would benefit from more competition and hence lower prices.

This revision also clarifies the legal framework for any future pipeline projects with non-EU countries, including with the UK when it becomes a non-EU country.

Exemptions for new gas pipelines from non-EU countries under strict conditions

The amended rules give exclusive competence to the EU when it comes to agreements on new EU gas lines with non-EU countries, also for granting exemptions. The Commission may authorise the member state, in which the pipeline’s first entry point is located, to open negotiations on gas delivery from a new pipeline from a non-EU country, unless it considers this to be in conflict with EU law or detrimental to competition or security of supply. It shall consult other EU countries concerned before proposing an exemption from EU rules and it is up to the Commission to decide whether to grant the exemption.

For existing pipelines (connected to EU pipelines before the entry into force of this directive), a member state can decide on a derogation within one year after the entry into force of the directive if it is not detrimental to competition.

Following formal approval by EU ministers, the directive will be published in the Official Journal of the EU and enter into force 20 days later. Member states will have nine months to bring their national legislation in line with this directive.

The EU currently imports over 70% of its consumption of natural gas mainly from Norway, Russia and Algeria mostly through pipelines.

EPP: Ending the abuse of monopolies in the gas market

After the vote, rapporteur Jerzy Buzek (EPP, PL) said: “Many profit-oriented stakeholders wanted to see these negotiations fail, as without this agreement, EU rules would not apply to gas pipelines from non-EU countries. But what would bring profit for some market players, would bring a multi-dimensional loss for our citizens and the Energy Union as a whole. From now on, all gas pipelines from non-EU countries, including Nord Stream 2, will have to abide by EU rules: third-party access, ownership unbundling, non-discriminatory tariffs and transparency. That translates into stronger energy security on our continent. This has always been the main goal of the European Parliament and I am delighted that we achieved it.”

According to the EPP the Gas Directive will make all pipelines on the entire EU territory, including territorial seas of the Member States, subject to strict EU internal market rules: third-party access, ownership unbundling, transparency and non-discriminatory tariffs. It will also apply to the much-debated Gas Pipeline project NordStream2.

“Today, we are putting an end to the era of external monopolies in the EU gas market which, for years, has exposed consumers to paying much higher energy bills and has been used to turn off gas taps in the middle of winter. This is excellent news for our citizens, industry and our overall security in the EU”, added Buzek.

“But this Directive is not against any country, investor or particular gas pipeline. The amended law will apply to all existing and new infrastructure – equally to the internal EU gas pipelines as well as those from non-EU countries into the EU. If anyone has a problem with any of these provisions, it discloses their real intentions,” he concluded.

S&Ds: The new common rules will bring more transparency and security to the supply

Socialists and Democrats welcome the new common rules for the internal market because it will bring more transparency and security to the supply.

This is part of the EU’s efforts to create an Energy Union that will ensure energy supply at an affordable price for all citizens and regions in the EU say S&Ds. The EU’s gas demand is around 480 billion cubic metres (bcm), but the EU can only produce less than half of this gas, so the rest is imported from third countries. Supply security is crucial for the EU’s energy security and for the competitiveness of its industry, and this requires diversification and legal certainty for investments on pipelines.

Even though fossil fuels will be gradually phased out of the European Union, the reality is that natural gas currently represents around a quarter of the EU’s overall energy consumption and its supply must be guaranteed.

“Our goal is to make the internal gas market work, which means allowing for gas to flow freely between member states so that all Europeans have access to gas at a fair price. Gas is transported mainly through pipelines, so the interconnection of gas national networks must be guaranteed, as well as non-discriminatory access to these networks. The deal reached with the Council is a positive step to bring third country pipelines in line with EU competition rules. The new legislation meets various needs: extension of the rules on the internal gas market to gas pipelines with a third country, within territorial limits; the possibility for member states to grant derogations (up to 20 years and renewable) for existing pipelines; confirmation of the validity of technical agreements concerning the operation of gas pipelines concluded between transmission system operators, provided that they comply with EU law,” said Dan Nica (S&D, RO), who is the S&D negotiator and the S&D spokesperson on energy.

“New projects such as North Stream 2 will have to apply competition rules (such as on ownership unbundling) and exceptions will only be possible under strict procedures. Provisions and agreements between member states and third countries will have to comply with the EU law, and will need to contribute to the creation of a truly integrated internal gas market,” Nica added.