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Arthur D. Little:
New Study Reviews Proposed Gas Directive Amendment

  • Implementing third party access on import pipelines will have no practical effect on supplies to the EU
  • Transparency regarding gas flows at entry points into the EU is already ensured
  • The proposed amendment raises several concerns about practical implications

March 19, 2018 | A recently published report by management consultancy Arthur D. Little analyses the implications of the proposed EU Gas Directive Amendment.

The study finds that the proposed changes would have little to no impact. For instance, third-party access can have no practical effect due to the lack of alternative shippers. The report also argues that tariff regulation is unlikely to result in any tangible benefits for consumers, since it only discloses the transport element of the price of delivered gas. Accordingly, the authors note that transparency at EU import entry points is already a reality thanks to the Network Codes. The unbundling of import pipelines may also be superfluous, since the affected offshore sections of pipeline are already owned and operated by separate legal entities.

Moreover, the paper raises questions about the practical implications of the proposed amendment. Firstly, it would not apply to LNG, which is particularly problematic as it suggests some modes of transportation for gas imports may receive preferential treatment, thus jeopardising the liberalisation of the market. In addition, the amendment would raise uncertainty about terms for derogations, and the involvement of different Member States or supplier nations would likely lead to market distortions. It would also create the need for intergovernmental agreements with third-party countries, which would be time consuming and may distort competition between various supply sources.

Furthermore, the report argues that the amendment appears to target offshore pipelines exclusively, putting them at a competitive disadvantage compared to onshore pipelines for no apparent reason. Lastly, if the aim is to halt certain import projects, this would be in conflict with the EU’s own security of supply objectives.

The report was commissioned by Nord Stream 2. For more information, please find the full Arthur D. Little study here.