FILE - In this Nov. 11, 2018 file photo a ship works offshore in the Baltic Sea on the natural gas pipeline Nord Stream 2 from Russia to Germany. (Bernd Wuestneck/dpa via AP)

New EU measures threaten to complicate Nord Stream pipeline

February 08, 2019 - 11:04 am

BERLIN (AP) — France and Germany have buried their differences on new European rules that could complicate plans for a gas pipeline from Russia to Germany.

After last-minute negotiations Friday between the two European Union powerhouses, ambassadors of EU countries meeting in Brussels gave the go-ahead to a tweaked proposal that will not threaten the politically sensitive project.

The agreement, which only Bulgaria voted against, sets the scene for negotiations within the EU for extending the bloc's rules regulating gas deliveries to incoming pipelines, like the Russian-German Nord Stream 2.

"It only happened because Germany and France worked very closely together, also with the Romanian presidency (of the EU) and other member states," German Chancellor Angela Merkel said in Berlin.

The Russian-German pipeline is being built under the Baltic Sea to deliver gas directly to Germany for further distribution across Europe, increasing the route's capacity over what already flows through the first Nord Stream pipeline.

Eastern European countries like Poland and Ukraine have vehemently objected to the project because they say it specifically bypasses their territories.

The United States, itself a major gas producer, has called the pipeline a form of Russian control over Germany and a threat to European energy security. It has also suggested that companies involved in the pipeline project could be vulnerable to energy-related sanctions against Russia.

"The Americans don't want Nord Stream 2 to happen," an adviser to French President Emmanuel Macron said on condition of anonymity because he was not authorized to be publicly identified, stressing that it was not American pressure that shaped the French position.

"What we say is that if Nord Stream 2 happens, we want it to happen in a European framework."

Berlin had been against the new EU directive but, after France threatened to use its weight to push it through, agreed to a compromise where German regulatory officials would oversee projects like Nord Stream 2, but with EU regulators having the final say, according to Macron's office.

Germany and France have the eurozone's two biggest economies and are traditionally the drivers of European integration, although the relationship hasn't always run smoothly. Macron's proposals for far-reaching reform of the EU have met with an often-lukewarm response in Berlin.

German officials were keen Friday to downplay suggestions of a Franco-German rift, arguing that Paris and Berlin have a strong relationship that allows them to resolve differences.

"I think this is a good day and it wouldn't have happened this way without German-French cooperation," Merkel said.

The decision ends a two-year impasse, and negotiations are now seen largely as a technical matter that will likely be resolved by this summer.

Once the new regulations are finalized, experts say they will subject Russia's Gazprom to EU regulations on the pipeline, and will not allow it to be its sole operator.

That will mean charging market prices for gas, rather than Gazprom making its own agreements, and will likely make running the pipeline more expensive in general, said Gustav Gressel, a senior policy fellow at the European Council on Foreign Relations think-tank in Berlin.

"Gazprom would have to run the pipeline in a much more commercial manner, and there will be much less money left that could be funneled into the private pockets of the regime or other parts of the Russian state," he said.

However, an attempt to implement new regulations mid-way through the Nord Stream 2 project are almost certain to run into legal challenges from Russia, said Katja Yafimava, a senior research fellow at Britain's Oxford Institute for Energy Studies.

Additionally, if the European Commission sees the directive as giving Europe leverage to secure agreements with Russia about gas transiting Ukraine in other pipelines, it could backfire, and make Moscow less willing to concede to a longer-term agreement on that, she said.

"Thus, while the European Commission may believe the amendment would put it into position of strength vis-a-vis Russia/Gazprom, in my view this is an illusion and even if the amendment passes it may well be a pyrrhic victory," she said in an email to The Associated Press.

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Geir Moulson in Berlin and Angela Charlton in Paris contributed to this story.

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