EU set to agree on mandate for talks over gas-deals scrutiny: officials

Brussels

EUROPEAN Union (EU) governments are poised to agree on Monday on a mandate for talks on a draft law to boost oversight of natural-gas contracts with Russia and other external suppliers, according to two officials with knowledge of the issue.

Energy ministers representing the bloc's 28 member states will decide on their position for negotiations with the European Parliament when they gather in Luxembourg at their quarterly meeting on June 6. They will probably endorse a provision to introduce a mandatory EU law compatibility check before governmental agreements on gas with third countries are negotiated and signed, said the officials, who asked not to be identified because the talks are private.

The draft law on intergovernmental energy agreements was proposed by the European Commission in February as part of a package to improve energy security in the region. The EU, which imports 53 per cent of the energy it consumes, wants to diversify its energy supply sources, cut dependence on imports and reduce greenhouse gases that result from the most polluting fossil fuels such as coal.

The move to boost scrutiny of contracts and to tighten energy links among member states comes after the crisis in Ukraine highlighted the degree of Europe's exposure to a possible disruption of flows from Russia, the supplier of 27 per cent of gas consumed in the EU. At stake is a campaign by the EU to win energy-policy authority from national governments that compares with existing European powers over monetary, antitrust and agriculture matters.

To enter into force, the proposed law on governmental agreements needs weighted-majority approval by member states in the EU Council of governments and majority backing from the European Parliament. The two institutions have the right to propose amendments and their positions are reconciled in negotiations known as trilogue, which also involve the Brussels-based commission.

The commission said in February it proposed obligatory ex-ante compatibility checks of governmental energy deals with EU law after its analysis showed that around one-third of the agreements related to infrastructure or supply contained provisions that breached the bloc's rules. Current EU law requires governments to notify the commission of their energy agreements with third countries only after they have been concluded.

Under the new proposal, member states would have to let the commission know about their draft governmental agreements before concluding them and won't be able to sign them before the EU regulatory arm has issued its opinion.

European governments differed in talks before the ministerial meeting on how much power they should confer to the commission, with some opting for a bigger role for the regulator and others preferring limited interference, the officials said.

The Netherlands, which hold the rotating EU presidency until the end of June, tried to bridge the gap by focusing on agreements with real potential impact on the energy market, one of the officials said.

Under a tentative compromise, representatives of EU nations agreed to apply the ex-ante checks to intergovernmental gas deals while excluding oil contracts from the assessment, the officials noted. They also softened the proposed provisions on ex-post assessment of non-legally binding commitments. Member states will not have to notify the commission about such commitments, which include joint political declarations or memoranda of understanding, unless they want to do so.

The final decision on the negotiating mandate is to be taken by the ministers. BLOOMBERG