EUROPEAN FOREIGN POLICY SCORECARD 2016

Eastern Neighbourhood

29 - Relations with the eastern neighbourhood on energy

Grade: B+
Unity 3/5
Resources 4/5
Strategy 4/5
Impact 4/5
Total 15/20
Scorecard 2015: A- (16/20)
Scorecard 2014: C (8/20)
Scorecard 2013: C (8/20)
Scorecard 2012: B+ (15/20)
Scorecard 2010/11: B+ (14/20)

The EU’s attempts to ensure energy security for its members suffered a setback from the Nord Stream 2 initiative

In February, the EU launched its Energy Union Framework Strategy in an effort to boost Europe’s energy security, primarily by diversifying sources and integrating the internal energy market. The strategy provides the basis for a loose arrangement rather than fully-fledged union. The project has come under pressure from measures by Russia to split the EU.

New controversies arose in 2015 after the announcement of Nord Stream 2: a pipeline intended to connect Russia to Germany, circumventing Eastern Europe. In November 2015, the Commission stated that the project would not receive EU funding since it undermined the security of supplies. By the end of the year, the Commission was still considering whether the project complied with the “third energy package” on ownership and competition. The new pipeline would challenge Ukraine’s position as a transit country and deprive it of leverage and transit fees.

The controversy surrounding Nord Stream 2 spilled over into sanctions policy in December as Italy demanded a political discussion on renewal of sanctions, rather than a simple rollover. This was in part motivated by the argument that Germany had been hypocritical in pushing for sanctions while agreeing to Nord Stream 2.

The EU successfully facilitated trilateral talks with Ukraine and Russia on the “winter package” of conditions for gas deliveries over the winter, including price and volumes. These negotiations were less acrimonious than in 2014, in large part because Russia needed the income. Ukraine said that it did not need Russian gas, thanks to reverse flows that came mostly from Slovakia. When electricity pylons to Crimea were sabotaged in November, Russia cut off gas supplies to Ukraine.

The EU continued to support Ukraine’s energy sector reforms, which involved ending gas-price subsidies and opening domestic enterprises (including Naftogaz, the state-owned gas-delivery company) to private and foreign investment. There was progress in extending the Eastern Europe Energy Efficiency and Environmental Partnership (E5P) to recent members Ukraine, Moldova, Armenia, and Georgia.