EC Adopts New Rules to Handle Natural Gas Supply Crises

July 21, 2009 // Published as a news service by IHS

The proposed regulation would strengthen the existing EU system for gas supply security by ensuring that all EU member states and their gas market players take effective action well in advance to prevent and mitigate the consequences of potential disruptions to gas supplies.

It also would create mechanisms for member states to work together to deal effectively with any major gas disruptions that might arise.

The new regulation was prepared in close collaboration with member states and the gas industry, including the Gas Coordination Group.

It responds to a specific request from the European Council, the European Parliament and the Energy Council asking EC Energy Commissioner Andris Piebalgs to prepare, as a matter of urgency, a new instrument to improve the EU emergency response framework for gas to replace Directive 2004/67, known as the Gas Security Directive.

The new regulation calls for member states to be fully prepared in case of supply disruption, through clear and effective emergency plans involving all stakeholders and incorporating fully the EU dimension of any significant disruption. The plans will be based on appropriate risk assessments.

The proposed regulation would provide a common indicator, known as N-1, to define a serious gas supply disruption. N-1 would signal the shutdown of a major supply infrastructure or equivalent, such as an import pipeline or production facility. It would require all member states to have a competent authority that would be responsible for monitoring gas supply developments, assessing risks to supplies, establishing preventive action plans and setting up emergency plans.

It would also oblige member states to collaborate closely in a crisis, including through a strengthened Gas Coordination Group and through shared access to reliable supply information and data.

"Increasing energy security will be one of the top priorities in the coming years," said EC President José Manuel Barroso. "We need to work for the best but make sure we are prepared for the worst. Europe must learn the lessons of previous crises and make sure that European citizens are never again left in the cold through no fault of their own. This proposal of the Commission would oblige member states to be prepared and work together in case of further gas disruptions."

Piebalgs called on the European Council and the European Parliament to adopt the proposals quickly, saying, "We have known for some time that the existing arrangements to deal with gas emergencies are insufficient. The Russia-Ukraine gas dispute in January 2009 confirmed our fears. All Member States recognise that we need common standards for security of gas supply for the whole EU. And those are the standards we propose today."

The proposed regulation would ensure that all EU consumers benefit from high levels of gas supply security. It would improve the framework for investment in new cross-border interconnections, new import corridors, reverse flows capacities and storage, supported also by the European Economic Recovery Plan. It confirms the greater interdependence of gas supplies within a single European gas market. And it provides a sound basis for the EU to defend its interests more effectively in its relations with external gas suppliers.

The EU is a major gas consumer, and the January 2009 gas crisis demonstrated weaknesses in the current mechanisms for dealing with supply disruptions. Gas now represents more than one quarter of energy supply in the EU. Over half of this gas comes from external sources, and by 2020 over 80% of EU gas is likely to be imported. Some member states are already totally dependent on imported gas.

For more information, see the EC's web site on the Second Strategic Energy Review.

Source: European Commission (EC).