Energy Charter: Multilateral transit negotiations move towards finalisation

Dec 19, 2002 01:00 AM

Negotiations among 51 European and Asian governments on a legally-binding agreement on energy transit issues, which have been under way for three years, took a major step towards finalisation. At their meeting in Brussels, the member-states of the Energy Charter Conference made significant progress towards finalising an Energy Charter Transit Protocol, negotiations on which began in early 2000.
The aim of the Protocol is to establish a clear set of multilateral rules under international law on energy transit issues, thus helping to reduce the level of political risk associated in particular with oil and gas projects involving transit in the Eurasian area.

Among other things, the Protocol includes provisions on the methodology for setting transit tariffs, the provision of access to available capacity in pipeline systems for third-party shippers, and the eradication of unlawful taking of energy materials in transit. Once the text has been finalised and prepared in all official languages of theEnergy Charter process, the Energy Charter Conference will then complete the Transit Protocol’s formal adoption.
But despite this progress, consultations are set to continue bilaterally concerning a number of three issues on which certain delegations maintain reserves. In particular, agreement needs to be found over the implementation of the so-called Regional Integration clause included in the Protocol on the initiative of the EU (under which the Protocol’s provisions will not apply to internal energy transportation within the EU, which will be governed by Community legislation).

Consultations will also continue concerning the Russian proposal for a so-called “right of first refusal” for transit shippers in the text of the Protocol (under which energy exporters with long-term supply contracts, whose short-term agreements for transit through third countries expire, would be given a right of preference to renew such agreements before transit capacity is offered to other parties), and on the issue of transit tariffs.
Energy Charter Conference Chairman Henning Christophersen welcomed the progress made towards finalising the Protocol, but underlined the importance of ensuring that mutually-acceptable solutions are now found to the three remaining issues.

In particular, Christophersen underlined the importance he attached to ensuring that Russia is able to sign up to the Transit Protocol, given its strategic role as an energy supplier and transit country.
“During my recent meeting with Russian Deputy Prime Minister Khristenko, and in the statement made by the Russian delegation to the meeting of the Charter Conference, assurances have been given both of Russia’s commitment to the Energy Charter process in general, and of its readiness to work with us towards a successful completion of the Transit Protocol,” noted Christophersen. “This encourages me to believe that we are close to finding solutions to the three remaining issues, allowing both Russia and the Energy Charter’s other 50 member states to adopt the Transit Protocol together in 2003”.

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