Brussels, 10/09/2007 (Agence Europe) - In parallel to its draft 3rd legislative package on the internal energy market to be presented on 19 September, the European Commission will be putting forward a series of measures to restrict access to the EU's energy sector by non-European groups and capital. EUROPE, which obtained a copy of an internal Commission discussion note, takes a look at this initiative that aims at all the major third countries that provide energy to the EU, and Russia in particular.
In its note, the DG Energy and Transport (TREN) discusses measures that could prove necessary to control investment by non-European companies in energy transport networks (gas in particular) if the option of ownership unbundling of production and transport activity by energy operators on the international; energy market is chosen. With this option, which will entail a re-composition in the capital of the energy sector in some member states, the EU could in fact become more vulnerable to a third country strategy aimed at dominance of the European markets, not only for supply but also for the acquisition of energy transport networks. The Commission's initiative is all the more justified as member states that are reluctant towards its ownership unbundling project could use the threat to block it. Also, the Commission hopes to prevent ownership unbundling from allowing third country public operators from acquiring EU infrastructure by escaping a ban on bundling production and network activity.
The DG TREN takes the view that both approaches are conceivable for controlling non-European investment in EU transport networks. According to the first, the EU27 could limit access by foreign groups to the European energy sector by imposing a reciprocity clause at the level of conditions for company access to their respective markets and investment rights, exploitation of production sources and use of networks. In a chapter entitled “Proposal for European ownership of networks”, DG TREN suggests the inclusion of a specific provision in internal market legislation defined as follows: “Member states and/or nationals of member states shall own more than 50 per cent of the transmission networks or effectively control them, whether directly or indirectly through one or more intermediate undertakings, except as provided in an agreement with a third country to which the Community is a party”. Used in the aviation sector, this kind of Community provision presents certain advantages: - It would not require a case-by-case decision on whether an individual takeover of a network company would be permissible for reasons of security of supply, which would therefore take pressure from individual member states to possibly oppose such takeovers. Also, it would not affect the free movement of capital within the internal market. It would constitute a strong tool for negotiations with third countries wishing to get access to the EU gas market. It would avoid the circumvention of ownership unbundling via intermediary companies in non-EU countries. On the other hand, there would also be some disadvantages, such as: - It risks being used to block foreign direct investment from non-EU companies and countries which would be welcome because, for example, non-EU pension funds without interests in gas supply may be prevented from holding important participations in the network companies. There is the risk that the clause would be made ineffective in relation to third countries with which the Community or individual member states have concluded international agreements; and the risk that the clause would be made ineffective because companies established in the EU but ultimately controlled by third countries may have to be considered nationals in the legal sense. On the basis of an analysis by the legal service, DG TREN stresses that the first approach comes up against legal uncertainty with regard to whether such a provision is in line with EU international obligations (such as the WTO agreement on the trade in services, GATS).
Known as the “regulatory approach”, the second approach is based on the control of energy transport infrastructures at national and/or European level. The DG TREN suggests four possible alternatives that can be used alone or combined to prevent uncontrolled access to the European energy sector by foreign groups: - a more moderate but not very operational solution, the designation of transmission system operators (TSO) that would consist of giving the Commission the right to examine any potential acquirer and investment projects; - a more radical solution, designation of the network energy sector as 'strategic', which would consist in defining energy as a strategic sector in the EU by restricting third country investment; - the establishment of Golden Shares in all companies holding a TSO license, thus allowing member states to keep a right of veto or a larger number of voting rights over the whole of the capital of a company that owns the networks; - and the blocking statute, which is a provision which, included in the 3rd legislative package, would prevent any TSO license holder from receiving, acting upon or in any other way honouring an instruction from a parent company or shareholder or government outside of the EU if that instruction is contrary to Community law.(eh)