A Commission meeting on September 19 called to toughen the terms of energy asset acquisition and ownership in the European Union countries. Brussels seems determined to veil Europe in an Energy Curtain.
Gazprom, the Russian gas monopoly and the largest gas exporter to Europe, will be among those to be hit by the measures the hardest. But then, its future is not as bleak as it might seem-the regulatory initiative is too radical to get through the EU legislative bodies.
Brussels has many reasons to worry about the European energy market, as foreign companies have been busily acquiring electric and gas distribution networks all over Europe for several years now. The majority of purchasers are companies that control the entire cycle from production and delivery to sales and distribution. Once they gain control of the distribution infrastructure, energy suppliers will have a free hand setting terms and prices for the end consumer.
That is what has set the European Union on its guard and lead to the creation of five bills to restrain EU energy asset purchasers. A ban on manufacturer-transporter corporate mergers is intended as the biggest weapon against energy monopolies. The EU legislative initiative proposes to break up available vertically integrated gas and energy holdings into small companies, and rule out the appearance of monopolies in the future.
The package envisages a ban on large outsider purchases of European energy grid and gas pipeline stock. That is logical-disintegration would open energy holdings to overseas bidders, as European Commission President Jose Manuel Barroso has warned. The new bills stipulate that such deals would require a special agreement with the bidder country. The package does not propose limiting foreign investment in mining assets and energy producing companies. It envisages the establishment of a supranational control body, an Agency for the Cooperation of Energy Regulators, or ACER.
This option of the European energy market reform, the most resolute of all offered for discussion, was backed by Neelie Kroes, the European Commissioner for Competition, and Energy Commissioner Andris Piebalgs at the September 19 meeting. Even despite their support, the reform blueprints are too radical to appeal to a market majority, and are unlikely to be passed.
Breaking up energy mammoths would hardly please the leading EU countries-Germany, France and Italy, with E.ON, RWE, Gaz de France, Electricite de France, Eni and Enel, which are Europe's largest energy concerns. Then, there are Spain's Endesa and Gas Natural also to reckon with. The proposed limitations would affect them all.
Quite different ideas are popular in EU countries now, at the peak of energy prices-to pool gas and energy companies in giant transnational holdings. So passions will boil.
Gazprom is also uneasy. Supplier of 28% of European-consumed natural gas (roughly 160 billion cubic meters annually), it is the world's largest gas holding, an owner of major gas fields and a ramified pipeline network, and active purchaser of sales stock in many European countries.
The proposed reform is a sword of Damocles over its expansion plans and tentative transport investments. One example of its plans is the Nord Stream project, which envisages a gas pipeline laid across the bottom of the Baltic Sea from Russia to Western Europe. Gazprom holds 51% stock in the company of the same name, which is implementing the project.
If the reform is implemented, Gazprom will have to establish a separate company for its gas distribution network or even sell it, if it wants to stay in the project. That is more than the Russian giant would put up with, as there is no greater guarantee for gas investments than merged mining and piping assets. More than that, Europe also stands to lose if Gazprom gets weaker-its gas fields are among the scanty resources promising an export increase for the next 20-30 years.
Europe is a master at compromises, and debates on the future of its energy market will go on for a long time. If the resolute reform pattern is approved, it will face an equally long procedure prior to implementation. The European Commission will pass the bills and send them over to the European Parliament. If they get through, the EU heads of state will sign it. So the package will have to get through a formidable sieve.
It is too early now to forecast the future of the European energy environment on the basis of blueprints whose fate is so vague. Perhaps, that is why the principal European gas and electric market players are extremely reserved about it.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
