To unite or not to unite, that's the question?

" The EU has a wide range of import sources for all fuels. However, the supplier concentration index rose from 8.1 in 2005 to 9.7 in 2014, indicating a deterioration in energy security. Some central and eastern Member States (Bulgaria, Estonia, Finland, Hungary, Lithuania and Slovak Republic) rely to a large extent on Russia as the main source of imports, in particular for gas."

This paragraph is taken from the European Commission's "Second Report on the State of the Energy Union" published on February 1, 2017. It is under the title "Energy Security, Solidar?ty and Trust".

The report underlines that the EU is making progress towards its 2020 targets for decarbonization, energy efficiency as well as building natural gas interconnectors among member states and having new LNG terminals.

Having read the report, one would expect that the energy union of the EU was already achieved. The section of the report on the assessment of progress and challenges does not mention different approaches of the member states when it comes to their security of supply.

"To address the security of supply challenges, the Energy Union strategy called for the diversification of energy sources, suppliers and routes, the improvement of emergency preparedness, engagement with external energy partners and more transparency on energy supplies."

But how?

The report simply fails to make a single reference to the Nord Stream 2 natural gas pipeline between Russia and Germany.

Nord Stream is the export gas pipeline with the annual design capacity of 55 billion cubic meters of gas running across the Baltic Sea to Germany. The project operator is the Nord Stream AG joint venture (Gazprom – 51 per cent, Wintershall and Uniper – 15.5 per cent each, and Gasunie and ENGIE – 9 per cent each). Nord Stream 2 is the construction project for a gas pipeline with the annual capacity of 55 billion cubic meters from Russia to Germany across the Baltic Sea.

According to 9 EU member states (Poland, Hungary, Czech Republic, Slovakia, Estonia, Lithuania, Latvia, Romania and Croatia), Nord Stream 2 will shutter European energy security and solidarity with Ukraine.

While German Chancellor Angela Merkel and supporters of the Nord Stream 2 underline that the project is a strictly commercial, some others argue that pursuing the project would damage European unity even further, and event name Nord Stream 2 killer because it is part of a programme to destroy European unity.

In November 2016, in a letter to European Council President Donald Tusk, Poland and Slovakia, with the support of Hungary, Romania, Lithuania, Latvia, and Estonia, petitioned the EC to block the pipeline and demanded that the issue be put onto the agenda of the December 2015 EU summit meeting. Jacek Saryusz-Wolski, a Polish MEP and member of the centre-right leadership in the European Parliament, expressed one of the currents of criticism when he charged that “Nord Stream 2 would be, above all, detrimental in geopolitical terms,” for it would allow Russia to “exert more political pressure and apply blackmail on the EU, its eastern member states, and its eastern neighbours.” This is (or was) a perspective also shared by the U.S. government.

(William Silkworth, head of the US State Department’s Bureau of Energy Resources office for Europe, the Western Hemisphere and Africa, told the Central and Eastern European Gas Conference in Zagreb, Croatia on 15 February 2017 that his opposition to the Nord Stream 2 project was "not an anti-Russia issue" but was instead related to the diversification of gas supplies.)

In short, there is no unified approach among the EU countries or any unified response from EU institutions, including the European Commission. There has been high expectations for the European Commission to make a comprehensive impact assessment of the project in legal, political, environmental and economic terms. We did receive the news from the European Commission today, but not for the assessment of the future or implications of the Nord Stream 2 but for the negotiation of the project.

The European Union offered to negotiate with Russia on behalf of its member countries about the Nord Stream 2 gas pipeline. According to a Danish newspaper, Politiken, the European Commission invited member countries to state their opinions about Nord Stream 2 and clarified that the pipeline can not be operated in a "legal vacuum". 

The news might have shocked many people especially opponents of the project not only using legal arguments (EU liberalization rules, ownership unbundling, third party access to the pipelines) to challenge Nord Stream 2, but believing that the new pipeline is simply unnecessary in the context of the decline in gas demand in Europe combined with the growing volume of LNG trade and EU's aim to increase the Union’s share of renewable energy.

However, this was not a suprise for some others. On March 13, the European Commission invited comments on commitments it is currently minded to accept to bring to an end its long-running investigation of Gazprom's conduct regarding gas markets in Central and Eastern Europe. In its statement, the European Commission said Gazprom had pledged to remove restrictions on reselling gas; ensure that prices in Central and Eastern Europe were competitive; and not act on any advantages regarding gas infrastructure that it had obtained because of its dominant selling position.

The European Commission's step on 13 March towards closing its antitrust case against Russia's Gazprom has the potential to serve for reaching an amicable deal between Gazprom and the EU on the controversial Nord Stream 2 Project, but most probably after Germany’s general elections in September.

It is believed this decision is as part of a broader package that will determine EU-Russia energy relations and, more broadly, the future of EU energy policy.