EC calls for Europe to 'speak with the same voice' on energy

London (Platts)--7Mar2006

The energy challenges facing Europe need "a coherent external policy" to
enable it to play "a more effective international role in tackling common
problems with energy partners worldwide," the European Commission says in a
late February draft of a Green Paper on Secure, Competitive and Sustainable
Energy for Europe. A final version is due to be published March 8.
     The broad objectives discussed in the paper include limiting the EU's
growing dependence on imported fuels; tackling security and competitiveness of
energy supply through diversity; achieving solidarity between member states
through an internal energy supply policy; tackling climate change and creating
new jobs; encouraging innovation through technology advances; and completing
the internal European electricity and gas markets.
     Agreeing at Community level an external energy policy would be a "break
from the past" and would allow member states to "speak with the same voice,"
the Commission says in the draft. It calls for a "clear but flexible
framework," one that would need an annual Strategic EU Energy Review.
     The key goals of this policy should be to reduce oil and gas import
dependence, with a benchmark acting as a useful discipline. "The 2007 Review
could define a limit for import dependency, and define the measures necessary
to achieve this goal, for political approval by the European Parliament and
the Council," the draft says.
     The EU also needs a clear policy on diversifying natural gas supplies,
the Commission says in the draft. The annual Review could identify pipeline
and LNG terminal projects of strategic importance, namely "independent
pipeline supplies from the Caspian region and North Africa into the heart of
the EU, and new LNG terminals serving markets that are presently characterised
by a lack of competition between gas suppliers." The Review could go on to
"acknowledge" the concrete political, financial and regulatory measures needed
to "actively support the undertaking of such projects by business."
     The draft suggests that dialogues with producer and transit countries
(notably Russia) should be set within the common vision offered by the Review.
"Work should start towards an EU-Russia Energy Treaty," the draft says.
     The draft raises the possibility of a "new more formal, targeted
instrument" to deal with emergency supply events. This might involve a
monitoring mechanism to provide early warning and to "enhance response
capabilities in the event of an external energy crisis." 
     Finally, the draft calls for development of a pan-European Energy
Community via a new treaty and bilateral agreements. Various partners would be
involved, the Commission says. "Turkey represents an essential transit route
... it could be brought within the framework of the South East Europe Energy
Community Treaty." Caspian and Mediterranean countries are important gas
suppliers and transit routes, and could be brought into an EU-Maghreb energy
treaty. Norway could be brought into the Energy Community Treaty, and a
specific partnership for Algeria should be considered.

henry_edwardes-evans@platts.com

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