French stymie latest attempt to open gas markets

Date: 12/06/1997

THE chances of reaching an agreement to open up Europe's natural gas market this year have faded into the far distance now that the left has taken power in Paris.

The Dutch government has abandoned last-ditch attempts to secure a liberalisation agreement under its EU presidency by scrapping plans for a special gathering of energy ministers on 24 June, after it became clear that French officials had hardened their position.

Contacts between Dutch Economic Affairs Minister Hans Wijers and new French Industry Minister Christian Pierret revealed that no further progress could be made.

The labour unions in state-owned Gaz de France were strongly opposed to the measures even before the left won power, but they have now become uncompromising.

“We are absolutely opposed to the gas directive as it is put together by the Dutch,” said Michel Clerc, a senior official with the Communist-led CGT union, which represents 77,000 staff in the energy sector.

“It is even worse than the electricity directive and we want the French government to use its right of veto.”

The latest blow follows a meeting of energy ministers late last month which made little progress on the key sticking points holding up a deal: how much of the market should be opened and whether long-term, exclusive 'take or pay' supply contracts should be allowed in future.

All they could do was show support in principle for an approach to market opening which would make power generators and large industries with a minimum consumption level 'eligible customers' - without agreeing on what that minimum should be.

The Dutch had proposed that the first round of liberalisation should allow big industrial customers using more than 25 million cubic metres (m3) of gas to choose their suppliers.

This threshold would be cut to 10 million m3 five years later and to 1 million m3 after a decade.

But Paris came up with new proposals to water this down which won support from Belgium.

The French argued the directive should divide up eligible customers into specified sectors (energy producers, industries and public distribution) and each should then be assigned an expected percentage level of market opening.

The supporters of extensive liberalisation - Germany, the UK, the Netherlands, Sweden, Ireland, Finland and Denmark - reject such a minimalist approach.

There are also still wide differences over how to deal with the take or pay contracts which allow the Union's major suppliers to set the volume of gas they deliver to supply firms for up to 30 years at fixed prices.

The UK, Ireland and Sweden say that such contracts must not be exclusive or of excessive length, while others, led by France and Belgium, argue that they are sometimes needed to ensure security of supply.