Saturday, June 9, 2012

Russia Eyes Exemptions to Third Energy Package

Russian Ambassador to the EU Vladimir Chizhov

Vladimir Chizhov has explained that the European Union's Third Energy Package is harming European energy markets and customers, in remarks he made before the 3-4 June EU-Russia summit.  "There is a paradox now in the EU energy market.  We see that major companies involved in infrastructure projects are prepared to invest only in those projects, which are guaranteed to be exempted from the provisions of the Third energy package," he said.  "This is a clear indication that this particular set of rules runs counter the interests of business and I would add, of consumers, too." 

Chizhov insisted that the countries holding back on investment were not just Russian.  Faced with the negative reprecussions to the EU's actions, Chizhov speculated on the EU's inability to reverse course:  "I understnad it might be difficult for the EU to backtrack on its own decisions.  Well, some people compare the EU with a crocodile," he said sarcastically.  "Not because of its teeth, but because of its inability to move backwards."

Chizhov continued to lobby for the EU to make exceptions that benefit Russian oil and gas interests.  He insisted that the EU should name South Stream a TEN-E project, which would accord the pipeline the status of a "project of European interest" and therefore eligible for EU assistance.  Russia in the past has lobbied for this status, which was enjoyed by the Russian-sponsored Nord Stream project and by South Stream's rival, the Nabucco pipeline.  The EU has maintained that Nabucco, and not South Stream, is the preferred project because Nabucco gives the EU access to additional sources of energy other than Gazprom.

Despite the opposition in European corners, however, Gazprom plans to ask that South Stream be exempted from the Third Energy Package.  "we have a legal opportunity to do so," Alexey Golubnichiy, Deputy Head of Gazprom's subsidiary Gazprom Export, told RT.  "Commissioner Oettinger indicated the European Commission will look at the possibility of granting South Stream these exemptions."  (Gunther  Oettinger is the European Commission's Minister of Energy.)

Golubnichiy worries that the appeal will take to long.  "The main problem is that giving us such exemptions will take from four to eight years.  And this is too long for South Stream."  South Stream is currently scheduled to go on line in 2014-2015.

While Russia has continued to push its campaign to have its oil pipelines exempted from the Third Energy Package, Europe has remained resolute in denying the exemption.