Russia challenges EU energy market rules

Associated Press: 1. May 2014
Russia challenges EU energy market rules

By JOHN HEILPRIN

This Jan. 26, 2014 photo provided by Hoegh LNG on Tuesday, April 22, 2014 shows Hoegh's gas vessel 'Independence' during her sea trial. Later this year, the giant ship will slide up to Lithuania’s Baltic port of Klaipeda. The 390-meter (1,300 foot) vessel is bigger than the largest aircraft carrier, but it’s not a warship. The floating natural gas terminal will play a key role in the Baltic region’s struggle to lessen its energy dependence on Russia

Russia has filed a complaint against the European Union's energy market laws claiming they violate international rules, the World Trade Organization said Thursday.

Among the stakes in the challenge to EU policy are how much control Russia's state-controlled gas company, Gazprom, will be able to exert over European pipelines and the degree to which Europe can diversify its supply lines.

Russia's case takes aim at the EU's so-called Third Energy Package, a bundle of laws that bans suppliers from owning transit facilities, such as pipelines. The laws took effect in September 2009 with the aim of opening up European gas and electricity markets.

In particular, the EU laws will affect the South Stream pipeline, in which Russia's Gazprom holds a 50 percent stake. The pipeline is due to provide gas from Russia to Bulgaria, Serbia, Croatia, Hungary, Slovenia, Austria and Italy by running under the Black Sea and circumventing Ukraine. It is expected to ship up to 63 billion cubic meters of gas from 2018.

European officials have warned Gazprom it would have to allow third-party gas producers to use the South Stream pipeline to comply with its new regulations. Russia is Europe's third-largest trading partner and its biggest gas and oil supplier, providing Europe with about a quarter of its gas.

Russia argues that the EU regulations are "inconsistent" with international trade rules on subsidies, services and other measures, the WTO says. The next step is for Russian-EU diplomats to try to settle their differences through consultations at the WTO. After that, an arbitration panel could be set up.

According to a WTO statement, the dispute focuses on the production, supply and transmission of natural gas or electricity, alleged discriminatory certification requirements, and access to network capacity by transmission service operators. The Geneva-based WTO oversees the rules of trade between nations that affect the flow of goods and services, exports and imports.

Russian President Vladimir Putin has been focusing on energy relations with the EU since well before the Kremlin's annexation of Crimea or the unrest in Ukraine's east, which brought into sharper focus the 28-nation bloc's close proximity, energy dependence and trade ties to Russia.

Since at least 2012, Moscow has described the EU energy market regulations as discriminatory against Gazprom and argued that South Stream should be exempt from the market regulations.