EU mulls security in energy deregulation

At the moment, only EU governments can invoke national security to keep foreign energy companies out. The suggestion to shift it to the EU level is justified in the view of the European Commission “to protect the internal market” of the entire 27-nation bloc, Barroso said. Barroso did not mention the company but EU officials have been concerned about the Russian state-owned oil and gas giant Gazprom, which supplies about 25% of Europe’s gas. Moscow has worried EU capitals by using energy as a political weapon in relations with its neighbors and refusing foreign companies unfettered access to Russian energy.

Barroso said next week’s deregulation package will also make clear that non-EU energy firms can have access to the EU market only if there is a similar open access to their home markets. The national security and reciprocity issues are part of a much larger energy deregulation package, to be unveiled next Wednesday, that will also push for EU gas and electricity companies to completely sell off their power lines and pipelines. Such unbundling is opposed by key EU states, notably France and Germany, but seen as a key step by the EU executive Commission to open up European energy markets.

A recent EU study has shown such ownership discourages competition and investment. It said out of €1.3 billion ($1.8 billion) in congestion revenues between 2001 and 2005, energy companies diverted only €250 million ($338 million) toward investments to boost capacity.

Neelie Kroes, the EU’s antitrust chief, said Germany, Italy and France have been the most resistant to needed changes. Barroso revealed no details of the unbundling package except to say that the EU head office’s preferred option is a complete severing of production and distribution of gas and electricity. Lesser steps -- creating what is known as “effective” or “legal” unbundling whereby companies distance themselves from transmission networks by setting up subsidiaries that manage them -- is seen as ineffective at the EU head office. (businessweek.com)