3 December Energy Council

Date: 05/12/1996

MINISTERS made hesitant progress towards sealing a deal on how and when to open up the EU's gas market to competition. Energy Commissioner Christos Papoutsis described the talks as a serious first step forward and said he was optimistic that a deal could be struck in the first half of next year. Although ministers agreed on issues such as public service agreements and the unbundling of accounts, deep differences surfaced on access for companies to national gas networks and how long-term contracts to take gas at fixed prices (known as take or pay deals) should be treated. Some of these agreements last for decades and force buyers to take gas even though they may not have a buyer themselves. The Irish presidency proposal for market opening was accepted as the basis for further work, even though it still lacks key figures determining how ambitious the market opening will be. Future talks will focus on the degree and speed of market opening. Account will also be taken of the EU's heavy dependence on imported gas and the different stages of market development across the Union. Some countries, such as Greece and Portugal, are just in the process of developing a mass market.

AGREEMENT was reached by ministers on a draft decision paving the way for the Energy Charter Treaty to be concluded. The charter provides a framework for cooperation in energy investment, trade and transit. It is aimed at encouraging western investment in east Europe's gas and oil industries. The treaty text must be approved by MEPs. EU governments are expected to start ratifying it early next year.

A HANDFUL of ministers blocked agreement on the EU's international energy cooperation programme, Synergy. Germany, France and the UK held out for a budget of only 10 million ecu for the five-year programme, rejecting an Irish presidency compromise suggesting a figure of 20 million ecu. The European Commission originally asked for 50 million ecu. Agreement was reached, however, on an updated list of Trans-European energy Networks which could be in line for Commission funding. Ministers added 31 new gas and electricity projects to the existing list. They also took stock of a Commission report warning that the Union's heavy dependency on imported oil will continue. More than three-quarters of the world's oil reserves are located in politically-sensitive areas, and continued vigilance over security of supply is necessary, stated the report.