'Gazprom clause' issues Russia ultimatum for energy co-operation 

The reciprocity clause was inserted into the text of the Commission's third energy liberalisation package as an apparent response to fears that ownership unbundling - the separation of integrated energy firms' production assets from their transmission assets - would lead to the indiscriminate acquisition of EU energy grids by third countries (EurActiv 30/08/07). 

"To protect the openness of our market, to protect the benefits that unbundling will bring, we need to place tough conditions on ownership of assets by non EU companies to make sure that we all play by the same rules," Commission President José Manuel Barroso said in a statement on 19 September, the day the Commission unveiled its new proposals.

Under the proposed clause, any company from a third country will have to "demonstrably and unequivocally comply with the same unbundling requirements as EU companies", according to the Commission's proposal.

A further clause stipulates that "third-country individuals and countries cannot acquire control over a Community transmission system or transmission system operator unless this is permitted by an agreement between the EU and the third country".

According to Christopher Jones, head of cabinet for Energy Commissioner Andris Piebalgs, the clause, once adopted as law, would remove national competence in the area and require that any bilateral energy agreements with third countries are dealt with exclusively at Community level. 

Speaking at a Brussels conference on 19 September, Energy Commissioner Andris Piebalgs justified the reciprocity clause on the grounds that it would give third-country suppliers "clear rules" for investment in the European market.

Christopher Jones, Deputy Head of Piebalgs's Cabinet, argued emphatically during the same conference that the reciprocity clause is "not a 'Gazprom clause'", a nickname given by Brussels insiders. 

In response to reporters' questions about how the EU would guarantee the legitimacy of companies operating in third countries with which the EU signs bilateral energy cooperation agreements, Jones replied: "Tomorrow. We'll see about that tomorrow."

According to press reports, Russia's Gazprom reacted mildly to the Commission's proposal, saying the company is "ready for constructive discussions on Russia's reliability as an energy supplier to Europe", Gazprom's press speaker Sergei Kuprianov told journalist in Moscow on 19 September.

But a source in Russia's Economic and Trade Ministry told the Russian news service Novosti that "damage from such politicizing of investment issues will be reciprocal, but will hit the European Union more severely".

Questioning whether the third-country clause will ensure continued investment into grids, Leigh Hancher of Counsel Allen & Overy argued that if a "third country telecoms operator acquires a grid network, we will still need a lot of regulation to ensure that this company invests in the expansion of the network". If regulation is still needed in this case to guarantee investment, "is the situation then any different if we had left the company vertically integrated?" Hancher asked.