Developing external energy policy for the EU

Based on Conclusions of the March 2007 European Council the EU developed clear priorities for the period 2007-2009 towards developing an effective European external energy policy and speaking with a common voice in the European Council Action Plan on Energy. Progress in the Action Plan will be reviewed annually by the European Council. The European Commission has been invited by the Council to put forward an updated Strategic Energy Review in early 2009.

This memo highlights some of the concrete developments since March 2007 towards developing a coherent and effective external energy policy, with the objective to enhance the EU’s energy security and support the fight against climate change.

1. Network of Energy Security correspondents (NESCO)

NESCO was officially established on 10^th May 2007 and consists of representatives of the European Commission, Council Secretariat and EU Member States. Created to facilitate the early exchange of information on issues of importance to the EU’s external energy policy and to serve as a forum for sharing assessments of external factors impacting on Europe's energy supply, NESCO members are linked up via a dedicated protected web portal to facilitate communication. Since its creation it has proven to be a useful early warning tool for threats to the EU’s energy security, complementary to the role played by the Gas coordination group and Oil supply group, particularly with regard to incidents or disputes which could threaten the flow of hydrocarbon supplies to the EU. The main advantage of NESCO lies in its early warning role in possible crisis situations.

2. Black Sea Communication

The Black Sea region is a production and transit region of strategic importance for effectively promoting diversification of EU energy supplies. Energy is therefore a key element in Commission’s Communication on the Black Sea Synergy adopted in April 2007, which provides further support for continuing a dialogue on energy security with the EU’s energy partners in the region. The EU has a specific interest in developing a sustainable and ecological oil dimension to its co-operation in the region, especially given the growing quantities of oil transiting the Black Sea, which have led to increasing safety and environmental concerns..

3. Central Asia Strategy

Another key region for enhancing EU energy security is Central Asia, considering the significant energy resources in Central Asia. Furthermore, many of the countries aim at diversifying their trade partners and supply routes, which in turn can contribute to meeting the EU energy security and growing supply needs. Thus, energy was outlined as a priority area for further co-operation in the new June 2007 EU strategy for the region – “The EU and Central Asia: Strategy for a New Partnership”, which reconfirmed the commitment to continue a regular energy dialogue at regional and bilateral level. In this context, legal and regulatory harmonisation in the energy sector continues to be promoted, including through the Baku Initiative^[1].

At the same time, support continues to be given to the practical development of an energy corridor from the Caspian region through the Black Sea to the EU. This includes technical studies on the various possibilities, support to the countries concerned and the facilitation of regional agreements.

The Commission continues to develop bilateral relations with key energy partners in the region. Examples are the implementation the Memorandum of Understanding on energy with Kazakhstan as well as projects to enhance energy relations with other countries in the region, especially with Turkmenistan and Uzbekistan.

4. Russia

The priority with respect to Russia, political conditions permitting, is to launch the negotiations on a post-PCA agreement which will include a substantial chapter on energy. At the last EU-Russia Summit in Mafra, it was agreed to establish an early warning mechanism on oil and gas supplies to the EU. The Energy Dialogue between EU and Russia continues with three newly established Thematic Groups on energy strategies and forecasts; development of energy markets and energy efficiency.

5. ENP area

Regional.

Energy is, since its inception, a strategic element of the European Neighbourhood Policy (ENP). ENP countries are, as energy producer and transit countries, crucial for the EU’s energy security. In this context the Commission has launched an analysis of all existing frameworks covering energy relations with third countries, regions and bodies in the ENP region in view of assessing the possible need for a legal framework for the EU-ENP energy relations.

The Euro-Mediterranean Partnership (or Barcelona Process) supports regional efforts to develop harmonised legal and regulatory energy frameworks through such initiatives as development of a Euro-Mashrek gas market, the integration of electricity markets in Maghreb and cooperation between energy regulators. The completion of electricity and gas ring in the Euro-Mediterranean region remains a priority. Significant progress was achieved on the Arab Gas Pipeline that will bring additional gas resources from Egypt and potentially Iraq to the EU. In order to enhance this process a Euro-Med Ministerial meeting will take place on 17 December 2007 in Cyprus.

Bilateral

The implementation of the Memorandum of Understanding of December 2005 on energy between EU and Ukraine is ongoing. The Memorandum builds on energy objectives outlined in the EU-Ukraine ENP Action Plan. A second progress report presented in September 2007 highlighted agreement on the terms of reference of the joint Commission-IAEA-Ukraine evaluation of the nuclear safety of the Ukrainian Nuclear Power Plants and proposed that a pledging conference be organised in order to support the necessary work to rehabilitate the Ukrainian gas transit network.

Ukraine and Moldova are currently observers in the Energy Community Treaty and their membership is under consideration as a means of promoting legal and regulatory harmonisation with the EU. The European Commission stepped up its cooperation considerably with Moldova, notably in the context of the preparation of the country’s new energy strategy.

In 2007, Joint declarations were signed on energy cooperation between the European Commission and Morocco and Jordan respectively with the objective to provide a framework for reinforcing energy relations. As regards Morocco, the cooperation will focus on strengthening its role as a transit country for gas supplies to the EU as well as an electricity exporter to the EU.

Energy cooperation with Jordan focuses, among other issues, on support for Jordan's energy policy, on enhancing energy security in the region to facilitate the future gas transit to the EU as well as ensuring highest standards of nuclear safety.

Finally, discussions are under way to enhance energy relations between the EU and two major energy suppliers in the region: Algeria and Egypt. While the negotiations with Egypt on an energy partnership are in their final stages, the EU and Algeria reached an agreement on territorial restrictions and alternative clauses in gas supply contracts in July 2007. This represents a further step in deepening the strategic energy relations between Algeria and the EU.

6. Middle East

Taking into consideration the importance of Middle East in terms of its gas and oil reserves as well as the significant renewable energy potential, the European Commission continues to develop energy relations with the countries in the region. This was one of the objectives of the EU-Africa-Middle East Energy Conference held on 1 November 2007 in Sharm El Sheikh. This conference, hosted by the European Commission and Egypt brought together the major energy players in the region in order to discuss co-operation in enhancing regional energy security, addressing climate change and improving access to energy services. Conference participants agreed to develop technical cooperation in order to address the issue of clean energy technologies, including in the area of solar and wind.

7. Cooperation with other key energy partners

Energy plays an ever more central role in the bilateral relations between the EU and third countries. The newly established EU-Brazil strategic partnership, launched at the first EU-Brazil Summit in July 2007 includes, inter alia, commitments to cooperate on renewable energy, with a special focus on biofuels, low carbon energy technologies, and increasing energy efficiency. The commitment to work together closely, including at global level, was also confirmed at the International Conference on Biofuels organised by the European Commission on 5 July 2007 in Brussels.

Energy security is a key issue in cooperation with China. The EU-China Summit this week launched the creation of an EU-China Clean Energy Centre in Beijing. Furthermore, the Commission is supporting the construction of a clean-coal-technology power plant.

Norway is not only the world's third largest exporter of oil and gas but also the EU's second most important supplier of gas. This gives the energy dialogue between the EU and Norway a special importance. In this dialogue the EU and Norway cover topics like the co-ordination of energy policies, including research and technological development, such as carbon capture and storage as well as the relations with other energy producing countries.

The EU and the United States share common interests in energy security as the world’s largest energy consumers. The EU-US strategic energy cooperation has been underway since the 2006 EU-US Summit in Vienna and focuses on developing energy relations in areas such as biofuels, energy efficiency, energy technology and global energy security. The EU, the US and also Brazil are working closely on the development of compatible standards for biofuels.

For more information please see :

http://ec.europa.eu/external_relations/g7_g8/intro/index.htm

^[1] Energy cooperation framework with the countries of Eastern Europe (including those covered by the European Neighbourhood Policy), Southern Caucasus and Central Asia that has been under way since November 2004.