European Commission claims South Stream in breach of EU law

South Stream construction agreements that several European countries, including Serbia, have signed with Russia breach EU law, said Brussels officials.

Bilateral agreements for the construction of the Gazprom-favoured South Stream gas pipeline – concluded between Russia, Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria – are all in breach of EU law and need to be renegotiated from scratch, the web portal EurActiv.com cited the European Commission as stating on December 4th.

Speaking in the European Parliament, Klaus-Dieter Borchardt, director for energy markets at the European Commission, said the deals were in breach of EU law.

- The Commission has looked into these intergovernmental agreements and came to the conclusion that none of the agreements is in compliance with EU law - Borchardt said.

- That is the reason why we have told these states that they are under the obligation, either coming from the EU treaties, or from the Energy Community treaty, that they have to ask for re-negotiation with Russia, to bring the intergovernmental agreements in line with EU law - he added.

He explained that the EU's Energy Commissioner, Günther Oettinger, had just sent a letter to Russian energy minister Alexander Novak explaining the situation and asking him “to look positively” into the possibility of re-negotiating the deals with the countries concerned.

These include EU members Bulgaria, Hungary, Greece, Slovenia, Croatia and Austria, as well as Serbia, which is a member of the Energy Community.

- What I can say is the intergovernmental agreements will not be the basis for the construction or the operation of South Stream. Because if the member states or states concerned are not renegotiating, then the Commission has the ways and means to oblige them to do so. And South Stream cannot operate under these agreements - Borchardt insisted.

The Commission official highlighted at least three major issues about the deals:

- Gazprom, which is both a producer and a supplier of gas, cannot simultaneously own production capacity and its transmission network;

- Non-discriminatory access of third parties to the pipeline needs to be ensured, that is, Gazprom cannot have an exclusive right to be the only shipper;

- The tariff structure needs to be addressed.