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INTERNATIONAL ENERGY LAW: THE EXAMPLE OF NORD STREAM II

INTERNATIONAL ENERGY LAW: THE EXAMPLE OF NORD STREAM II. WHAT IS INTERNATIONAL ENERGY LAW? Traditional view.

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INTERNATIONAL ENERGY LAW: THE EXAMPLE OF NORD STREAM II

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  1. INTERNATIONAL ENERGY LAW: THE EXAMPLE OF NORD STREAM II

  2. WHAT IS INTERNATIONAL ENERGY LAW? Traditionalview ‘To study the international law of natural resources is rapidly to discover that it is not a single monolithic topic. Almost everything depends, if not on the specific resource, on the category of natural resource that one is studying’ (Rosalyn Higgins, Problems and Process – International law and how we use it) The allocation of rights and duties concerning the exploitation of all energy resources between individuals, between individuals and the government, between governments and between states. (Adrian Bradbrook, Energy Law as an Academic Discipline)

  3. A DIFFERENT TAKE: PRINCIPLES OF ENERGY LAW PRINCIPLE OF NATIONAL RESOURCE SOVEREIGNTY PRINCIPLE OF ACCESS TO MODERN ENERGY SERVICES PRINCIPLE OF ENERGY JUSTICE PRINCIPLE OF PRUDENT, RATIONAL AND SUSTAINABLE USE OF NATURAL RESOURCES PRINCIPLE OF THE PROTECTION OF THE ENVIRONMENT, HUMAN HEALTH & COMBATTING CLIMATE CHANGE ENERGY SECURITY AND RELIABILITY PRINCIPLE PRINCIPLE OF RESILIENCE ‘A Treaties for Energy Law’, Journal of World Energy Law & Business 11 (2018) 1, 34-48.

  4. A CONCEPTUALLY DIFFERENT APROACH RESOURCES LAW AND POLICY VS ENERGY LAW AND POLICY GAS PROJECTS AS THE EXAMPLE OF CONFLICTING APPROACHES

  5. NORD STREAM 2 – facts • 1200 KM OFFSHORE PIPELINE CONNECTING RUSSIA AND GERMANY • TOTAL COST IN THE RANGE OF 9 BILLION EURO • OPERATIONAL IN 2020 • NORD STREAM 2 AG IS A SWISS COMPANY 100 PERCENT OWNED BY GAZPROM • FINANCING AGREEMENTS WITH ENGIE, OMV, SHELL, UNIPER AND WINTERSHALL

  6. EU LAW DEVELOPMENTS AND NORD STREAM 2 • STEP I – GAS MARKET DIRECTIVE IS APPLICABLE TO NORD STREAM 2 • STEP II – A SEPARATE INTERGOVERNMENTAL AGREEMENT (IGA) FOR NORD STREAM 2 • STEP III – AMENDING THE GAS MARKET DIRECTIVE

  7. NORD STREAM 2 – eugas market regulation • THE QUESTION OF APPLICABLE LAW CAN BE APPROACHED FROM THREE LEVELS OF LAW: • INTERNATIONAL LAW: • 1982 UN CONVENTION ON THE LAW OF THE SEA • EUROPEAN UNION LAWS AND REGULATIONS: • NATURAL GAS MARKET DIRECTIVE • NATIONAL LAWS AND REGULATIONS: • EEZ: FINLAND AND SWEDEN • TERRITORIAL WATERS: DENMARK AND GERMANY

  8. POSSIBLE INTERGOVERNMENTAL AGREEMENT (IGA) FOR NORD STREAM 2 • IS A SPECIFIC IGA BASED ON “PRINCIPLES OF EU ENERGY LAW” NECESSARY: NO, BUT IT IS AN OPTION • DECISION-MAKING FOR A SEPARATE EU-RUSSIA IGA: ARTICLE 218 TFEU • THE MAIN QUESTIONS ARE WHETHER IT IS NEEDED AT ALL AND, IF YES, WOULD IT BE A MIXED AGREEMENT OR EXCLUSIVE EU

  9. POSSIBLE IGA FOR NORD STREAM 2- IS IT NECESSARY? FOR THE REALISATION OF THE PROJECT – NOT NECESSARY MANY CROSS-BORDER PIPELINES ARE CONSTRUCTED AND OPERATED WITHOUT AN IGA (Nord Stream 1, Green Stream and MedGaz) FOR FILLING A LEGAL VOID – NOT NECESSARY LEGAL REGIME IS CLEAR AND BASED ON INTERNATIONAL, EU AND NATIONAL LAWS OF RELEVANT COASTAL STATES FOR ENSURING TRANSIT VIA UKRAINE – IS THIS THE RIGHT LEGAL TOOL?

  10. POSSIBLE IGA FOR NORD STREAM 2 - QUESTION OF COMPETENCE SHARED OR EXCLUSIVE EU COMPETENCE: EU ENJOYS EXCLUSIVE COMPETENCE TO CONCLUDE AGREEMENTS WHEN THEIR CONCLUSION COULD AFFECT OR ALTER THE SCOPE OF COMMON RULES - COMMISSION DOES NOT EXPLAIN HOW EU ENERGY LAW IS AFFECTED - MY INTERPRETATION: NO IMPACT ON EU ENERGY LAW AS RULES THAT WOULD BE APPLIED WOULD NOT BE THOSE OF EU ENERGY LAW - HOW ABOUT UKRAINE TRANSIT AND THE QUESTION OF COMPETENCE?

  11. AMENDING THE GAS MARKET DIRECTIVE • WHY? NECESSARY FOR THE “COMPLETION OF THE INTERNAL MARKET” AND “SECURITY OF SUPPLY” • MARKETS MORE INTERLINKED THAN EVER BEFORE • ACCESS TO MARKETS MORE DIVERSIFIED THAN EVER • IMPACT OF THE RECENT GAZPROM SETTLEMENT • NO REFERENCE IN ANY PRIOR LEGISLATIVE INITIATIVES OR PLANS PRIOR TO SEPTEMBER 2017… • IT IS ’LEX NORD STREAM 2’ – BUT THE IMPACT IS MUCH WIDER

  12. AMENDING GAS MARKET DIRECTIVE SIGNIFICANT CHANGE TO STATUS QUO: EU ENERGY LAW IS NOT APPLICABLE TO EXTERNAL IMPORT PIPELINES: TRANSMED PIPELINE (ENRICO MATTEI PIPELINE), MEDGAZ, GREENSTREAM, NORD STREAM, NOR THE PLANNED GALSI PIPELINE… EU ENERGY LAW IS APPLICABLE TO INTERNAL EU SECTIONS OF IMPORT PIPELINES: SOUTHERN GAS CORRIDOR (SGC) AND TRANS-ADRIATIC PIPELINE, NABUCCO, OPAL, EUSTREAM, YAMAL…

  13. SCOPE OF THE DIRECTIVE ARTICLE 2, POINT (17):  ‘INTERCONNECTOR’ MEANS A TRANSMISSION LINE WHICH CROSSES OR SPANS A BORDER BETWEEN MEMBER STATES FOR THE PURPOSE OF CONNECTING THE NATIONAL TRANSMISSION SYSTEM OF THOSE COUNTRIES OR A TRANSMISSION LINE BETWEEN A MEMBER STATE[ ] AND A THIRD COUNTRY [ ] UP TO THE TERRITORY [ ] OF THE MEMBER STATES OR THE TERRITORIAL SEA OF THE MEMBER STATE [ ]; RECITAL 5 OF THE AMENDMENT: THE APPLICABILITY OF DIRECTIVE 2009/73/EC [ ] TO GAS [ ] TRANSMISSION LINES TO AND FROM THIRD COUNTRIES REMAINS CONFINED TO THE TERRITORY[ ] OF THE MEMBER STATES. [ ] AS REGARDS OFFSHORE [ ] GAS TRANSMISSION LINES, IT SHOULD BE APPLICABLE IN THE TERRITORIAL [ ] SEA [ ] OF THE MEMBER STATE[ ] WHERE THE FIRST INTERCONNECTION POINT WITH THE MEMBER STATES’ NETWORK IS LOCATED. WHAT DOES THIS MEAN? SCOPE EXTENDED TO THE TERRITORIAL SEA OF THE MEMBER STATE WHERE THE FIRST INTERCONNECTION POINT IS LOCATED WHAT DOES THIS MEAN IN PRACTISE? VIRTUAL ENTRY POINT AT THE BORDER OF THE TERRITORIAL SEA

  14. Scope of thenewrules ARTICLE 36 (EXEMPTION) AVAILABLE FOR NEW PIPELINES ARTICLE 49a (DEROGATION) AVAILABLE FOR COMPLETED PIPELINES WHAT DOES THIS MEAN IN TERMS OF • DISCRIMINATION? ONLY NORD STREAM 2 CANNOT QUALIFY FOR AN EXEMPTION OR DEROGATION • COMPETENCE? ARTICLE 194(2) TFEU AND NATIONAL ENERGY RIGHTS (STRUCTURE OF SUPPLY AND CHOICE BETWEEN ENERGY SOURCES)

  15. INTERNATIONAL LAW AND NORD STREAM 2 UNITED NATIONS LAW OF THE SEA CONVENTION • TERRITORIAL WATERS AND EZCLUSIVE ECONOMIC ZONE WTO LAW • COMPLIANCE OF THE AMENDED DIRECTIVE • PANEL REPORT IN EUROPEAN UNION AND ITS MEMBER STATES — CERTAIN MEASURES RELATING TO THE ENERGY SECTOR (WR/DS476/R) ENERGY CHARTER TREATY • FAIR AND EQUITABLE TREATMENT • STABILITY AND PREDICTABILITY • STATE SHOULD ACT CONSISTENTLY • DISCRIMINATION • INTENT AND EFFECT

  16. conclusion: role of law in globalenergygovernance GLOBAL ENERGY PRODUCERS AND CONSUMERS: IS THE THERE SCOPE FOR A GLOBAL LEGAL FRAMEWORK FOR ENERGY? OR IS THE CURRENT WAVE OF NATIONALISM TOO STRONG? PARIS AGREEMENT AS A EXAMPLE? INTERNATIONAL ENERGY CHARTER AS AN EXAMPLE? KEY ISSUES RECOGNISING SOVEREIGNTY BALANCE BETWEEN CLIMATE AND ENVIRONMENTL CONSIDERATIONS AND ECONOMIC DEVELOPMENT

  17. Kim Talus James McCulloch Chair in Energy Law Director, Tulane Center for Energy Law Tulane Law School ktalus@tulane.edu Professor of European Economic and Energy Law UEF Law School Professor of Energy Law University of Helsinki

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