Arthur D. Little Predicts Proposed EU Gas Directive Amendment Will Not Achieve Objectives

LONDON–(BUSINESS WIRE)–Arthur D. Little (ADL) today published an analysis of the impact of
current EU Commission proposals to extend the regulations of the Third
Gas Directive to pipelines from third countries supplying gas to the EU.
The “Analysis of the Proposed Gas Directive Amendment” report finds that
the proposals are unlikely to meet the Commission’s objectives of
improving competition and security of supply.

Overall, the report finds that thanks to liberalization, the EU gas
market is now beginning to function very well, although it could be
improved through full implementation of existing rules by all Member
States.

The amendment is most unlikely to achieve its stated objectives for
three key reasons, according to the report. Firstly, implementing third
party access on import pipelines will have no practical effect on
supplies to the EU. Secondly, there is already transparency over gas
flows at EU entry points. Finally, tariff regulation is unlikely to
bring any consumer benefits.

Yvonne Fuller, Principal in the Energy & Utilities practice explains:
“Our analysis shows that the liberalized EU gas market is starting to
work well. Although there is room for improvement, our report echoes the
views of many market participants who believe that the proposed
amendment is unnecessary and may even lead to higher gas prices due to
greater administrative complexity and higher transportation tariffs.
Overall, our report recommends a deep and thorough impact analysis of
these proposed amendments before a decision is made by the Council of
the EU and the EU Parliament.”

ADL’s report also sets out the potential practical impacts of the
proposed amendment. These include the potential need for complex
Intergovernmental Agreements with third countries that may distort
competition between different supply sources. In addition, it will bring
uncertainty about derogation terms and the involvement of different
member states and supplier nations. As the amendment appears to only
apply to a small subset of pipelines (such as those which have
underwater sections), it puts them at a competitive disadvantage,
particularly as it does not apply to Liquified Natural Gas (LNG)
imports. Finally, by halting certain import projects, security of supply
will be affected as the number of access routes into the EU will be
reduced.

To download the full report, please click here: http://www.adl.com/reviewgasdirective

Contacts

Arthur D. Little
Sue Glanville
+447715817589
[email protected]
or
Cate
Bonthuys
+447746546773
[email protected]