Security of gas supply and task of the Energy Union to overcome regional problems

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1 Security of gas supply and task of the Energy Union to overcome regional problems Janez Kopač Director Public Energy Hearing Community ITRE Secretariat Committee, 23 May

2 Massive supply capacities in a shrinking market Source: Tor Martin Anfinnsen, Statoil

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6 European security of supply concerns are predominantly regional Public Energy Hearing Community ITRE Secretariat Committee, 23 May

7 2014: Stress test and a disruption of Russian gas supplies to Ukraine Stress test 2014 high vulnerability of the region in case of Russian supply disruption 7

8 Major pipeline infrastructure is sufficient

9 CESEC missing infrastructure and market elements for security of supply Based on the same 2014 stress test: 6 priority projects to increase SoS via strengthened interconnection TAP Interconnector GR-BG (IGB) Interconnector BG-SRB System reinforcement BG System reinforcement ROM LNG Terminal HR LNG evacuation system towards HU MoU signed in July 2015 EU AL AT BG FYROM GR HR HU IT ROM SI SK SRB UA ECS to monitor and facilitate CESEC list of measures.

10 Investments example CESEC 6 priority projects to increase SoS via strengthened interconnection TAP (already decided) Interconnector GR-BG (IGB) Interconnector BG-SRB System reinforcement BG System reinforcement ROM LNG Terminal HR LNG evacuation system towards HU To be financed by the market Role of IFIs such as the EIB or the EBRD may be considered.

11 Energy Community Contracting Parties with existing gas markets Contracting Parties with emerging gas markets European Union Contracting Parties Candidate Observers Public Energy Hearing Community ITRE Secretariat Committee, 23 May

12 Poland HRV HRV-BIH HRV-BIH PCI 15 LNG terminal PECI 13 ITA-ALB GRE-ALB

13 REGULATION concerning measures to safeguard the security of gas supply and repealing Regulation (EU) No 994/2010 Article 15: Switch-on clause Energy Union is lacking governance

14 Reciprocity clause in the Treaty Article xx The Energy Community shall aim at creating equal conditions in the relations between authorities, market participants and infrastructure projects of Member States of the European Union and of the Contracting Parties in accordance with Article 7. For this purpose, the Ministerial Council may adopt a Decision based on Article 42. Explanation The regime applicable to energy flows, infrastructure and cross-border cooperation on the interface between EU Member States and Contracting Parties has long been an issue of concern and may be considered the biggest obstacles to pan-european energy market integration. The reason for the regulatory gap on these borders is that, on the one hand, adaptations made under Title II of the Treaty (Article 24) only extends the acquis communautaire to Contracting Parties part of the interface and not the Member States and that, on the other hand, the Treaty requires nondiscriminatory treatment in terms of rights and obligations also on this interface. The alternative option, extending acquis to the Energy Community under Titles III or IV of the Treaty, turned out to be barred on account of the European Union s Decision 500/2006. Past attempts to tackle this problem through an Interpretation under Article 94 of the Treaty also proved to be ineffective. Finding a solution for this problem is of importance and urgency for both existing and future acquis (such as network codes). The Secretariat considers the introduction of a general reciprocity clause in the Treaty as most suitable for ensuring legal certainty and non-discrimination. In the alternative, the Secretariat fully supports the so-called switch-on clause recently proposed by the European Commission for the new Regulation on Security of Gas Supply which eventually could become a general principle under the Treaty. Contracting Parties reactions to the original proposal by the Secretariat support this approach

15 Energy Community fit for the future Further alignment of the EnC with EU acquis is needed ref. Network Codes Reciprocity is needed Eliminate 3 rd country clause Introduce switch-on clause Closing the legal gap interconnector Dispute resolution on EU EnC IPs ACER ECRB TPA exemptions CBA 15

16 yline EU European Energy Community Region EuEnCR

17 Possible solutions Treaty reforms switch-on clause E.g. Draft gas SoS Regulation Title III / IV Energy Community Treaty ACER Regulation 17

18 Thank you for your attention! ITRE Energy Public Community Hearing Secretariat 18