COMMON POSITION (EC) No 17/98 adopted by the Council on 12 February 1998 with a view to the adopting Directive 98/.../EC of the European Parliament and of the Council concerning common rules for the internal market in natural gas
Date: 1998-02-12
Institutions: Council of the European Union
Subjects: EU law, energy supply, energy transport, natural gas, single market, storage

C  91/46

EN

Official  Journal  of  the  European  Communities

26.3.98

COMMON  POSITION  (EC)  No  17/98

adopted  by  the  Council  on  12  February  1998

with a view to the adopting Directive 98/. . ./EC of the European Parliament and of the Council
concerning  common  rules  for  the  internal  market  in  natural  gas

(98(C  91/05)

THE  EUROPEAN  PARLIAMENT  AND  THE  COUNCIL  OF
THE  EUROPEAN  UNION,

Having  regard  to  the  Treaty  establishing  the  European
Community,  and  in  particular  Articles  57(2),  66  and
100a  thereof,

Having  regard  to  the  proposal  from  the  Commission (1),

Having regard to the opinion of the Economic and Social
Committee (2),

Acting  in  accordance  with  the  procedure  referred  to  in
Article  189b  of  the  Treaty (3),

(1)  Whereas, according to Article 7a of the Treaty, the
internal  market  shall  comprise  an  area  without
internal  frontiers  in  which  the  free  movement  of
goods,  persons,  services  and  capital  is  ensured;
whereas  it  is  important  to  adopt  measures  to
continue  the  completion  of  the  internal  market;

(2)  Whereas,  under  Article  7c  of 

the  Treaty,
differences  in  development  of  certain  economies
have  to  be  taken  into  account,  but  derogations
must  be  of  a  temporary  nature  and  cause  the  least
possible  disturbance  to  the  functioning  of  the
common  market;

(3)  Whereas the establishment of a competitive natural
important  element  of  the

gas  market 
completion  of  the  internal  energy  market;

is  an 

(1)  OJ  C  65,  14.3.1992,  p.  14,  and  OJ  C  123,  4.5.1994,

p.  26.

(2)  OJ  C  73,  15.3.1993,  p.  31,  and  OJ  C  195,  18.7.1994,

p.  82.

(4)  Whereas Council Directive 91/296/EEC of 31 May
1991 on the transit of natural gas through grids (4)
and  Council  Directive  90/377/EEC  of  29  June
1990  concerning  a  Community  procedure  to
improve  the  transparency  of  gas  and  electricity
prices  charged  to  industrial  end-users (5)  constitute
a  first  phase  of  the  completion  of  the  internal
market  in  natural  gas;

(5)  Whereas  it  is  now  necessary  to  take  further
measures  with  a  view  to  establishing  the  internal
market  in  natural  gas;

(6)  Whereas the provisions of this Directive should not
affect  the  full  application  of  the  Treaty, 
in
free
the  provisions  concerning 
particular 
movement of goods in the internal market and the
rules on competition, and do not affect the powers
of  the  Commission  under  the  Treaty;

the 

(7)  Whereas  the  internal  market  in  natural  gas  needs
to  be  established  gradually,  in  order  to  enable  the
industry to adjust in a flexible and ordered manner
to  its  new  environment  and  in  order  to  take
account  of  the  different  market  structures  in  the
Member  States;

(8)  Whereas  the  establishment  of  the  internal  market
in  the  natural  gas  sector  should  favour  the
interconnection and interoperability of systems, for
example  through  compatible  qualities  of  gas;

(9)  Whereas a certain number of common rules should
be  established  for  the  organisation  and  operation
of  the  natural-gas  sector;  whereas,  in  accordance
with the principle of subsidiarity, these rules are no
more  than  general  principles  providing  for  a
framework,  the  detailed  implementation  of  which
should  be  left  to  Member  States,  thus  allowing
each  Member  State  to  maintain  or  choose  the
regime  which  corresponds  best  to  a  particular
situation, 
to
authorisations  and 
the  supervision  of  supply
contracts;

particular  with 

regard 

in 

(3)  Opinion  of  the  European  Parliament  of  17  November  1993
(OJ C 329, 6.12.1993, p. 182), Council common position of
12  February  1998  and  Decision  of  the  Euroepan  Parliament
of  . . .  (not  yet  published  in  the  Official  Journal).

(4)  OJ  L  147,  12.6.1991,  p.  37.  Directive  as  last  amended  by

Directive  95/49/EC  (OJ  L  233,  30.9.1995,  p.  86).

(5)  OJ L 185, 17.7.1990, p. 16. Directive as last amended by the

1994  Act  of  Accession.

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C  91/47

(10)  Whereas  the  external  supply  of  natural  gas  is  of
particular  importance  for  the  purchase  of  natural
gas  in  Member  States  highly  dependent  on  gas
imports;

(11)  Whereas,  as  a  general  rule,  undertakings  in  the
natural  gas  sector  should  be  able  to  operate
without  being  discriminated  against;

(12)  Whereas for some Member States the imposition of
public  service  obligations  may  be  necessary  to
ensure  security  of  supply  and  consumer  and
environmental protection, which, in their view, free
competition, 
itself,  cannot  necessarily
guarantee;

left 

to 

(13)  Whereas  long-term  planning  may  be  one  means  of
carrying  out  those  public  service  obligations,
taking  into  account  the  possibility  of  third  parties
seeking  access  to  the  system;  whereas  Member
States  may  monitor 
contracts
undertaken  in  order  to  keep  up  to  date  with  the
situation  on  supply;

take-or-pay 

(14)  Whereas  Article  90(1)  of  the  Treaty  obliges  the
Member  States  to  respect  the  rules  on  competition
and
public 
with 
undertakings  which  have  been  granted  special  or
exclusive rights;

undertakings 

regard 

to 

specific 

conditions;  whereas 

(15)  Whereas  Article  90(2)  of  the  Treaty  subjects
undertakings  entrusted  with  the  operation  of
services  of  general  economic  interest  to  these  rules
under 
the
implementation  of  this  Directive  will  have  an
impact  on  the  activities  of  such  undertakings;
whereas,  as  referred  to  in  Article  3(3),  Member
States  need  not  apply  Article  4,  in  particular,  to
their  distribution  infrastructure  in  order  not  to
in  fact  the  fulfilment  of
obstruct 
obligations  of  general  economic  interest  imposed
on  gas  undertakings;

law  or 

in 

(16)  Whereas, when imposing public service obligations
on undertakings of the natural gas sector, Member
States  must  therefore  respect  the  relevant  rules  of
the Treaty as interpreted by the Court of Justice of
the  European  Communities;

an 

authorisation 

the  construction  or  operation  of  relevant  facilities
to 
requirement;  whereas,
however,  such  requirement  should  not  have  the
effect  of 
the
undertakings  of  the  sector;

restricting  competition  among 

(18)  Whereas Decision No 1254/96/EC of the European
Parliament  and  of  the  Council  of  5  June  1996
laying  down 
for
trans-European  energy  networks (1),  contributes  to
the  development  of  integrated  infrastructures  for
the  natural  gas  sector;

series  of 

guidelines 

a 

(19)  Whereas  the  technical  rules  for  the  operation  of
systems  and  direct  lines  must  be  transparent  and
must  ensure  interoperability  of  systems;

(20)  Whereas basic rules must be laid down with regard
to  transmission,  storage  and  liquefied  natural  gas
undertakings, as well as to distribution and supply
undertakings;

(21)  Whereas it is necessary to provide for access by the
competent  authorities  to  the  internal  accounts  of
undertakings,  with  due  regard  for  confidentiality;

in  order 

(22)  Whereas  the  accounts  of  all  integrated  natural  gas
undertakings  should  provide  for  a  high  degree  of
transparency;  whereas  the  accounts  should  be
separate  for  different  activities  when  this 
is
necessary 
to  avoid  discrimination,
cross-subsidisation  and  other  distortions  of
competition,  taking  into  account  in  relevant  cases
that  transmission  for  accounting  purposes  includes
re-gasification;  whereas  separate  accounts  should
not  be  required  for  legal  entities,  such  as  stock  or
futures exchanges, which do not, other than in this
trading capacity, perform any of the functions of a
natural  gas  undertaking;  whereas 
integrated
accounts  for  hydrocarbon  production  and  related
activities  may  be  produced  as  part  of 
the
requirement  for  accounts  for  non-gas  activities
required  by  this  Directive;  whereas  the  relevant
information  in  Article  23(3)  should  include,  where
required,  accounting  information  about  upstream
pipelines;

(17)  Whereas  basic  criteria  and  procedures  should  be
laid  down  concerning  the  authorisations  which
Member  States  may  grant  for  the  construction  or
operation  of  relevant  facilities  under  their  national
system;  whereas  these  provisions  should  not  affect
the  relevant  rules  of  national  legislation  subjecting

(23)  Whereas  access  to  the  system  should  be  open  in
accordance with this Directive and should lead to a

(1)  OJ  L  161,  29.6.1996,  p.  147.  Decision  as  last  amended  by
Decision  No  1047/97/EC  (OJ  L  152,  11.6.1997,  p.  12).

C  91/48

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26.3.98

sufficient  and,  where  appropriate,  a  comparable
level of opening-up of markets in different Member
States;  whereas,  at  the  same  time,  the  opening-up
should  not 
of  markets 
create  unnecessary
in  the  competitive  situation  of
disequilibrium 
undertakings  in  the  different  Member  States;

(24)  Whereas,  owing  to  the  diversity  of  structures  and
the  special  characteristics  of  systems  in  Member
States,  there  should  be  different  procedures  for
system  access  operating 
in  accordance  with
objective, 
transparent  and  non-discriminatory
criteria;

(25)  Whereas,  in  order  to  achieve  a  competitive  market
in natural gas, provision should be made for access
to  upstream  pipeline  networks;  whereas  separate
treatment  is  required  as  respects  such  access  to
upstream  pipeline  networks,  having  regard,  in
particular,  to  the  special  economic,  technical  and
operational 
such
networks;  whereas  the  provisions  of  this  Directive
do  not  in  any  event  affect  national  taxation  rules;

characteristics 

relating 

to 

limited  in  time  and  scope  and  granted  in  a
transparent  manner,  under  the  supervision  of  the
Commission;

(31)  Whereas specific provisions are needed for markets
and  investments  in  other  areas  which  have  not  yet
reached a developed stage; whereas derogations for
such  markets  and  areas  should  be  limited  in  time
and  scope;  whereas,  for  the  sake  of  transparency
and  uniformity,  the  Commission  should  have  a
significant 
these
derogations;

the  granting  of 

role 

in 

(32)  Whereas  this  Directive  constitutes  a  further  phase
of liberalisation; whereas, once it has been put into
effect,  some  obstacles  to  trade  in  natural  gas
between Member States will nevertheless remain in
the
place;  whereas  proposals 
operation  of  the  internal  market  in  natural  gas
should be made in the light of experience; whereas
the  Commission  should  therefore  report  to  the
European  Parliament  and  the  Council  on  the
application  of  this  Directive,

improving 

for 

(26)  Whereas  provision  should  be  made  regarding
authorisation,  construction  and  use  of  direct  lines;

HAVE  ADOPTED  THIS  DIRECTIVE:

(27)  Whereas  provision  should  be  made  for  safeguards

and  dispute  settlement  procedures;

CHAPTER  I

SCOPE  AND  DEFINITIONS

(28)  Whereas  any  abuse  of  a  dominant  position  or  any

predatory  behaviour  should  be  avoided;

Article  1

(29)  Whereas,  as  some  Member  States  are  liable  to
experience  special  difficulties  in  adjusting  their
systems,  provision  should  be  made  for  temporary
derogations;

(30)  Whereas  long-term  take-or-pay  contracts  are  a
market  reality  for  securing  Member  States’  gas
supply;  whereas,  in  particular,  provision  should  be
made  for  derogations  from  certain  provisions  of
this  Directive 
in  the  case  of  a  natural  gas
undertaking  which  is  or  would  be  in  serious
economic  difficulties  because  of  its  take-or-pay
obligations;  whereas  these  derogations  should  not
undermine 
to
liberalise  the 
in  natural  gas;
whereas  any  take-or-pay  contracts  entered  into  or
renewed  after  the  entry  into  force  of  this  Directive
should  be  concluded  prudently  in  order  not  to
hamper  a  significant  opening  of  the  market;
whereas,  therefore,  such  derogations  should  be

the  purpose  of 

internal  market 

this  Directive 

for 

rules 

the
This  Directive  establishes  common 
transmission,  distribution,  supply  and  storage  of  natural
gas.  It  lays  down  the  rules  relating  to  the  organization
and  functioning  of  the  natural-gas  sector,  including
liquefied  natural  gas  (LNG),  access  to  the  market,  the
operation  of  systems,  and  the  criteria  and  procedures
applicable 
for
transmission,  distribution,  supply  and  storage  of  natural
gas.

the  granting  of  authorizations 

to 

Article  2

For  the  purposes  of  this  Directive:

1. 

‘natural gas undertaking’ means any natural or legal
person  carrying  out  at  least  one  of  the  following
functions:  production,  transmission,  distribution,
supply, purchase or storage of natural gas, including
LNG,  which  is  responsible  for  the  commercial,
technical  and/or  maintenance  tasks  related  to  those
functions,  but  shall  not  include  final  customers;

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2. 

3. 

4. 

5. 

‘upstream  pipeline  network’  means  any  pipeline  or
network  of  pipelines  operated  and/or  constructed  as
part  of  an  oil  or  gas  production  project,  or  used  to
convey  natural  gas  from  one  or  more  such  projects
to  a  processing  plant  or  terminal  or  final  coastal
landing terminal;

‘transmission’  means  the  transport  of  natural  gas
through a high pressure pipeline network other than
an  upstream  pipeline  network  with  a  view  to  its
delivery  to  customers;

‘transmission  undertaking’  means  any  natural  or
legal  person  who  carries  out  the  function  of
transmission;

‘distribution’  means  the  transport  of  natural  gas
through  local  or  regional  pipeline  networks  with  a
view  to  its  delivery  to  customers;

6. 

‘distribution undertaking’ means any natural or legal
person  who  carries  out  the  function  of  distribution;

7. 

‘supply’  means  the  delivery  and/or  sale  of  natural
gas,  including  LNG,  to  customers;

8. 

‘supply  undertaking’  means  any  natural  or  legal
person  who  carries  out  the  function  of  supply;

9. 

‘storage  facility’  means  a  facility  used  for  the
stocking  of  natural  gas  and  owned  and/or  operated
by  a  natural  gas  undertaking,  excluding  the  portion
used  for  production  operations;

10.  ‘storage  undertaking’  means  any  natural  or  legal
person  who  carries  out  the  function  of  storage;

11.  ‘LNG  facility’  means  a  terminal  which  is  used  for
the  liquefaction  of  natural  gas  or  the  offloading,
storage  and  re-gasification  of  LNG;

12.  ‘system’  means  any  transmission  networks  and/or
distribution  networks  and/or  LNG  facilities  owned
and/or  operated  by  a  natural  gas  undertaking,
including its facilities supplying ancillary services and
those of related undertakings necessary for providing
access  to  transmission  and  distribution;

15.  ‘integrated  natural  gas  undertaking’  means  a
vertically  or  horizontally  integrated  undertaking;

16.  ‘vertically  integrated  undertaking’  means  a  natural
gas  undertaking  performing  two  or  more  of  the
tasks  of  production, 
transmission,  distribution,
supply  or  storage  of  natural  gas;

17.  ‘horizontally 

integrated  undertaking’  means  an
undertaking performing at least one of the functions
of  production,  transmission,  distribution,  supply  or
storage  of  natural  gas,  and  a  non-gas  activity;

18.  ‘related  undertaking’  means  affiliated  undertakings,
within  the  meaning  of  Article  41  of  the  Seventh
Council  Directive,  83/349/EEC,  of  13  June  1983
the  Treaty  on
based  on  Article  54(3)(g)  of 
associated
consolidated 
undertakings,  within  the  meaning  of  Article  33(1)
thereof,  and/or  undertakings  which  belong  to  the
same  shareholders;

accounts (1), 

and/or 

19.  ‘system  user’  means  any  natural  or  legal  person
supplying  to,  or  being  supplied  by,  the  system;

20.  ‘customers’  means  wholesale  or  final  customers  of
natural  gas  and  natural  gas  undertakings  which
purchase  natural  gas;

21.  ‘final  customer’  means  a  consumer  purchasing

natural  gas  for  his  own  use;

22.  ‘wholesale 

customers’,  where  Member  States
recognise  their  existence,  means  any  natural  or  legal
persons  who  purchase  and  sell  natural  gas  and  who
do  not  carry  out  transmission  or  distribution
functions inside or outside the system where they are
established;

transportation 

23.  ‘long-term  planning’  means  the  planning  of  supply
and 
capacity  of  natural  gas
undertakings  on  a  long-term  basis  with  a  view  to
meeting  the  demand  for  natural  gas  of  the  system,
diversification  of  sources  and  securing  supplies  to
customers;

24.  ‘emergent  market’  means  a  Member  State  in  which
the  first  commercial  supply  of  its  first  long-term
natural gas supply contract was made not more than
10  years  earlier;

13.  ‘interconnected  system’  means  a  number  of  systems

which  are  linked  with  each  other;

25.  ‘security’  means  both  security  of  supply  and

provision,  and  technical  safety.

14.  ‘direct 

line’  means  a  natural  gas  pipeline

(1)  OJ L 193, 18.7.1983, p. 1. Directive as last amended by the

complementary  to  the  interconnected  system;

1994  Act  of  Accesion.

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26.3.98

CHAPTER  II

GENERAL  RULES  FOR  THE  ORGANISATION  OF  THE
SECTOR

Article  3

2. Where Member States have a system of authorisation,
they  shall  lay  down  objective  and  non-discriminatory
criteria  which  shall  be  met  by  an  undertaking  applying
for  an  authorisation  to  build  and/or  operate  natural  gas
facilities  or  applying  for  an  authorisation  to  supply
natural  gas.  The  non-discriminatory 
criteria  and
procedures  for  the  granting  of  authorisation  shall  be
made  public.

1. Member  States  shall  ensure,  on  the  basis  of  their
institutional  organisation  and  with  due  regard  for  the
principle  of  subsidiarity,  that,  without  prejudice  to
paragraph  2,  natural  gas  undertakings  are  operated  in
accordance  with  the  principles  of  this  Directive  with  a
view  to  achieving  a  competitive  market  in  natural  gas,
and  shall  not  discriminate  between  such  undertakings  as
regards  either  rights  or  obligations.

3. Member  States  shall  ensure  that  the  reasons  for  any
refusal  to  grant  an  authorisation  are  objective  and
non-discriminatory  and  are  given  to  the  applicant.
Reasons  for  such  refusals  shall  be  forwarded  to  the
Commission 
information.  Member  States  shall
establish  a  procedure  enabling  the  applicant  to  appeal
against  such  refusals.

for 

2. Having  full  regard  to  the  relevant  provisions  of  the
Treaty,  in  particular  Article  90  thereof,  Member  States
may  impose  on  natural  gas  undertakings,  in  the  general
economic  interest,  public-service  obligations  which  may
relate to security, including security of supply, regularity,
quality  and  price  of  supplies,  and  to  environmental
protection.  Such  obligations  shall  be  clearly  defined,
transparent,  non-discriminatory  and  verifiable;  they,  and
any  revision  thereof,  shall  be  published  and  notified  to
the  Commission  by  Member  States  without  delay.  As  a
means  of  carrying  out  public  service  obligations  in
relation  to  security  of  supply,  Member  States  which  so
wish  may  introduce  the  implementation  of  long-term
planning,  taking  into  account  the  possibility  of  third
parties  seeking  access  to  the  system.

to  apply 

3. Member  States  may  decide  not 
the
provisions of Article 4 with respect to distribution insofar
as  the  application  of  these  provisions  would  obstruct,  in
law  or  in  fact,  the  performance  of  the  obligations
imposed  on  natural  gas  undertakings  in  the  general
economic interest and insofar as the development of trade
would  not  be  affected  to  such  an  extent  as  would  be
contrary to the interests of the Community. The interests
of  the  Community  include,  inter  alia,  competition  with
regard  to  eligible  customers  in  accordance  with  this
Directive  and  Article  90  of  the  Treaty.

4. For  the  development  of  newly  supplied  areas  and
efficient  operation  generally,  and  without  prejudice  to
Article 20, Member States may decline to grant a further
authorisation  to  build  and  operate  distribution  pipeline
systems in any particular area once such pipeline systems
have been or are proposed to be built in that area and if
existing  or  proposed  capacity  is  not  saturated.

Article  5

that 

shall  ensure 

the  minimum 

technical 
technical  design 

rules
Member  States 
establishing 
and
operational requirements for the connection to the system
of  LNG  facilities,  storage  facilities,  other  transmission  or
distribution  systems,  and  direct  lines,  are  developed  and
made  available.  These  technical  rules  shall  ensure  the
interoperatibility  of  systems  and  shall  be  objective  and
non-discriminatory.  They  shall  be  notified 
the
Commission  in  accordance  with  Article  8  of  Council
Directive  83/189/EEC  of  28  March  1983  laying  down  a
procedure for the provision of information in the field of
technical  standards  and  regulations (1).

to 

Article  4

CHAPTER  III

TRANSMISSION,  STORAGE  AND  LNG

1.
In circumstances where an authorisation (e. g. licence,
permission,  concession,  consent  or  approval)  is  required
for the construction or operation of natural gas facilities,
the  Member  States  or  any  competent  authority  they
designate  shall  grant  authorisations  to  build  and/or
operate such facilities, pipelines and associated equipment
on  their  territory,  in  accordance  with  paragraphs  2  to  4.
Member States or any competent authority they designate
may  also  grant  authorisations  on  the  same  basis  for  the
supply  of  natural  gas  and  for  wholesale  customers.

Article  6

Member  States  shall  take  the  measures  necessary  to
ensure  that  transmission,  storage  and  LNG  undertakings
act  in  accordance  with  Articles  7  and  8.

(1)  OJ  L  109,  26.4.1983,  p.  8.  Directive  as  last  amended  by

Directive  96/139/EC  (OJ  L  32,  10.2.1996,  p.  31).

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Article  7

Article  10

1. Each  transmission,  storage  and/or  LNG  undertaking
shall  operate,  maintain  and  develop  under  economic
conditions  secure,  reliable  and  efficient  transmission,
storage  and/or  LNG  facilities,  with  due  regard  to  the
environment.

2.
In  any  event,  the  transmission,  storage  and/or  LNG
undertaking  shall  not  discriminate  between  system  users
or  classes  of  system  users,  particularly  in  favour  of  its
related  undertakings.

3. Each  transmission,  storage  and/or  LNG  undertaking
shall  provide  any  other  transmission  undertaking,  any
other  storage  undertaking  and/or  any  distribution
undertaking with sufficient information to ensure that the
transport  and  storage  of  natural  gas  may  take  place  in  a
manner  compatible  with 
the  secure  and  efficient
operation  of  the  interconnected  system.

Article  8

1. Each  distribution  undertaking  shall  operate,  maintain
and develop under economic conditions a secure, reliable
the
system,  with  due 
and 
environment.

efficient 

regard 

to 

2.
In  any  event,  the  distribution  undertaking  must  not
discriminate  between  system  users  or  classes  of  system
users,  particularly  in  favour  of  its  related  undertakings.

3. Each distribution undertaking shall provide any other
distribution  undertaking,  and/or  any  transmission  and/or
storage undertaking with sufficient information to ensure
that  the  transport  of  gas  may  take  place  in  a  manner
compatible  with  the  secure  and  efficient  operation  of  the
interconnected  system.

Article  11

to  disclose 

1. Without  prejudice  to  Article  12  or  any  other  legal
each  distribution
information, 
duty 
undertaking 
confidentiality  of
the 
commercially sensitive information obtained in the course
of  carrying  out  its  business.

shall  preserve 

1. Without  prejudice  to  Article  12  or  any  other  legal
duty  to  disclose  information,  each  transmission,  storage
and/or LNG undertaking shall preserve the confidentiality
of  commercially  sensitive  information  obtained  in  the
course  of  carrying  out  its  business.

2. Distribibution  undertakings  shall  not,  in  the  context
of  sales  or  purchases  of  natural  gas  by  the  distribution
undertakings or related undertakings, abuse commercially
sensitive  information  obtained  from  third  parties  in  the
context  of  providing  or  negotiating  access  to  the  system.

2. Transmission undertakings shall not, in the context of
sales  or  purchases  of  natural  gas  by  the  transmission
undertakings or related undertakings, abuse commercially
sensitive  information  obtained  from  third  parties  in  the
context  of  providing  or  negotiating  access  to  the  system.

CHAPTER  V

UNBUNDLING  AND  TRANSPARENCY  OF  ACCOUNTS

Article  12

CHAPTER  IV

DISTRIBUTION  AND  SUPPLY

Article  9

1. Member  States 
that  distribution
undertakings  act  in  accordance  with  Articles  10  and  11.

ensure 

shall 

to 

Member  States  or  any  competent  authority 
they
designate,  including  the  dispute  settlement  authorities
referred  to  in  Article  21(2)  and  Article  23(3),  shall  have
right  of  access 
the  accounts  of  natural  gas
undertakings  as  set  out  in  Article  13  which  they  need  to
consult  in  carrying  out  their  functions.  Member  States
and  any  designated  competent  authority,  including  the
dispute 
the
confidentiality  of  commercially  sensitive  information.
Member States may introduce exceptions to the principle
of  confidentiality  where  this  is  necessary  in  order  for  the
competent  authorities  to  carry  out  their  functions.

settlement  authorities, 

shall  preserver 

States  may 

2. Member 
impose  on  distribution
undertakings  and/or  supply  undertakings,  an  obligation
to  deliver  to  customers  located  in  a  given  area  or  of  a
certain class or both. The tariff for such deliveries may be
regulated,  for  instance  to  ensure  equal  treatment  of  the
customers  concerned.

Article  13

1. Member  States  shall  take  the  necessary  steps  to
ensure  that  the  accounts  of  natural  gas  undertakings  are
kept  in  accordance  with  paragraphs  2  to  5  of  this
Article.

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2. Natural  gas  undertakings,  whatever  their  system  of
ownership  or  legal  form,  shall  draw  up,  submit  to  audit
and publish their annual accounts in accordance with the
rules  of  national  law  concerning  the  annual  accounts  of
limited  liability  companies  adopted  pursuant  to  the
Fourth  Council  Directive,  78/660/EEC,  of  25  July  1978
based  on  Article  54(3)(g)  of  the  Treaty  on  the  annual
accounts  of  certain  types  of  companies (1).

Undertakings  which  are  not  legally  obliged  to  publish
their  annual  accounts  shall  keep  a  copy  of  these  at  the
disposal  of  the  public  at  their  head  office.

3.
Integrated  natural  gas  undertakings  shall,  in  their
internal  accounting,  keep  separate  accounts  for  their
natural  gas 
transmission,  distribution  and  storage
activities,  and,  where  appropriate,  consolidated  accounts
for  non-gas  activities,  as  they  would  be  required  to  do  if
the  activities  in  question  were  carried  out  by  separate
undertakings,  with  a  view  to  avoiding  discrimination,
cross-subsidisation  and  distortion  of  competition.  These
internal  accounts  shall  include  a  balance  sheet  and  a
profit  and  loss  account  for  each  activity.

Where  Article  16  applies  and  access  to  the  system  is  on
the  basis  of  a  single  charge  for  both  transmission  and
distribution, 
and
distribution  activities  may  be  combined.

transmission 

accounts 

the 

for 

4. Undertakings shall specify in their internal accounting
the  rules  for  the  allocation  of  assets  and  liabilities,
expenditure  and  income  as  well  as  for  depreciation,
without  prejudice  to  nationally  applicable  accounting
rules,  which  they  follow  in  drawing  up  the  separate
accounts  referred  to  in  paragraph  3.  These  rules  may  be
amended  only  in  exceptional  cases.  Such  amendments
shall  be  mentioned  and  duly  substantiated.

5. The  annual  accounts  shall  indicate  in  notes  any
transaction  of  a  certain  size  conducted  with  related
undertakings.

(1)  OJ  L  222,  14.8.1978,  p.  11.  Directive  as  last  amended  by

Directive  94/8/EC  (OJ  L  82,  25.3.1994,  p.  33).

CHAPTER  VI

ACCESS  TO  THE  SYSTEM

Article  14

For  the  organisation  of  access  to  the  system,  Member
States  may  choose  either  or  both  procedures  referred  to
in  Article  15  and  in  Article  16.  These  procedures  shall
operate  in  accordance  with  objective,  transparent  and
non-discriminatory criteria.

Article  15

In  the  case  of  negotiated  access,  Member  States  shall
1.
take  the  necessary  measures  for  natural  gas  undertakings
and  eligible  customers  either 
inside  or  outside  the
territory  covered  by  the  interconnected  system  to  be  able
to negotiate access to the system so as to conclude supply
contracts  with  each  other  on  the  basis  of  voluntary
commercial  agreements.  The  parties  shall  be  obliged  to
negotiate  access  to  the  system  in  good  faith.

2. The  contracts  for  access  to  the  system  shall  be
negotiated  with  the  relevant  natural  gas  undertakings.
Member  States  shall  require  natural  gas  undertakings  to
publish  their  main  commercial  conditions  for  the  use  of
the system within the first year following implementation
of  this  Directive  and  on  an  annual  basis  every  year
thereafter.

Article  16

Member States opting for a procedure of regulated access
shall  take  the  necessary  measures  to  give  natural  gas
undertakings  and  eligible  customers  either  inside  or
outside the territory covered by the interconnected system
a  right  of  access  to  the  system,  on  the  basis  of  published
tariffs  and/or  other  terms  and  obligations  for  use  of  that
system. This right of access for eligible customers may be
given  by  enabling  them  to  enter  into  supply  contracts
with  competing  natural  gas  undertakings  other  than  the
owner  and/or  operator  of  the  system  or  a  related
undertaking.

Article  17

1. Natural  gas  undertakings  may  refuse  access  to  the
system  on  the  basis  of  lack  of  capacity  or  where  the
access  to  the  system  would  prevent  them  from  carrying
out  the  public  service  obligations  referred  to  in  Article
3(2) which are assigned to them or on the basis of serious
economic  and  financial  difficulties  with  take-or-pay
contracts having regard to the criteria and procedures set
out  in  Article  25  and  the  alternative  chosen  by  the
Member  State  according  to  paragraph  1  of  that  Article.

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Duly  substantiated  reasons  shall  be  given  for  such  a
refusal.

2. Member  States  may  take  the  measures  necessary  to
ensure that the natural gas undertaking refusing access to
the  system  on  the  basis  of  lack  of  capacity  or  a  lack  of
connection  shall  make  the  necessary  enhancements  as  far
as it is economical to do so or when a potential customer
is  willing  to  pay  for  them.  In  circumstances  where
Member  States  apply  Article  4(4),  Member  States  shall
take  such  measures.

Article  18

1.  Member  States  shall  specify  eligible  customers,
meaning those customers inside their territory which have
the  legal  capacity  to  contract  for,  or  to  be  sold,  natural
gas  in  accordance  with  Articles  15  and  16,  given  that  all
customers  mentioned  in  paragraph  2  of  this  Article  must
be  included.

2. Member  States  shall  take  the  necessary  measures  to
ensure 
following  customers  are
designated  as  eligible  customers:

that  at 

least 

the 

—  gas-fired  power  generators, 

irrespective  of  their
annual  consumption  level;  however,  and  in  order  to
safeguard  the  balance  of  their  electricity  market,  the
Member States may introduce a threshold, which may
not  exceed  the 
level  envisaged  for  other  final
customers,  for  the  eligibility  of  combined  heat  and
power  producers.  Such  thresholds  shall  be  notified  to
the  Commission,

—  other  final  customers  consuming  more  than  25
million  cubic  metres  of  gas  per  year  on  a
consumption-site  basis.

3. Member  States  shall  ensure  that  the  definition  of
eligible customers referred to in paragraph 1 will result in
an  opening  of  the  market  equal  to  at  least  20 %  of  the
total  annual  gas  consumption  of  the  national  gas
market.

4. The  percentage  mentioned  in  paragraph  3  shall
increase  to  28 %  of  the  total  annual  gas  consumption  of
the  national  gas  market  five  years  after  the  entry  into
force of this Directive, and to 33 % thereof 20 years after
the  entry  into  force  of  this  Directive.

5.
If the definition of eligible customers as referred to in
paragraph  1  results  in  a  market  opening  of  more  than
30 % of the total annual gas consumption of the national
gas market, the Member State concerned may modify the
definition  of  eligible  customers  to  the  extent  that  the
opening  of  the  market  is  reduced  to  now  lower  than
30 %  of  such  consumption.  Member  States  shall  modify

the definition of eligible customers in a balanced manner,
not  creating  specific  disadvantages  for  certain  types  or
classes  of  eligible  customers,  but  taking  into  account
existing  market  structures.

6. Member  States  shall  take  the  following  measures  to
ensure  that  the  opening  of  their  natural  gas  market  is
increased  over  a  period  of  10  years:

—  the threshold set in the second indent of paragraph 2
for  eligible  customers  other  than  gas-fired  power
generators,  shall  be  reduced  to  15  million  cubic
metres per year on a consumption-site basis five years
after  the  entry  into  force  of  this  Directive,  and  to  5
million  cubic  metres  per  year  on  such  basis  10  years
after  the  entry  into  force  of  this  Directive,

—  the  percentage  mentioned 

in  paragraph  5  shall
increase to 38 % of the total annual gas consumption
of  the  national  gas  market  five  years  after  the  entry
into  force  of  this  Directive,  and  to  43 %  of  such
consumption  10  years  after  the  entry  into  force  of
this  Directive.

7.
In  respect  of  emergent  markets,  the  gradual  market
opening  provided  for  by  this  Article  shall  start  to  apply
from  the  expiry  of  the  derogation  referred  to  in  Article
26(2).

8. Distribution  undertakings,  if  not  already  specified  as
eligible customers under paragraph 1, shall have the legal
capacity  to  contract  for  natural  gas  in  accordance  with
Articles  15  and  16  for  the  volume  of  natural  gas  being
consumed by their customers designated as eligible within
their  distribution  system, 
in  order  to  supply  those
customers.

9. Member  States  shall  publish  by  31  January  of  each
year  the  criteria  for  the  definition  of  eligible  customers
referred  to  in  paragraph  1.  This  information,  together
with  all  other  appropriate  information  to  justify  the
fulfilment  of  market  opening  under  this  Article,  shall  be
sent  to  the  Commission  to  be  published  in  the  Official
Journal  of  the  European  Communities.  The  Commission
may  request  a  Member  State  to  modify  its  specifications
if  they  create  obstacles  to  the  correct  application  of  this
Directive  as  regards  the  smooth  functioning  of  the
internal  market  in  natural  gas.  If  the  Member  State
concerned  does  not  comply  with  this  request  within  a
period of three months, a final decision shall be taken in
accordance  with  procedure  I  of  Article  2  of  Council
Decision  87/373/EEC  of  13  July  1987  laying  down  the
procedures  for  the  exercise  of  implementing  powers
conferred  on  the  Commission (1).

(1)  OJ  L  197,  18.7.1987,  p.  33.

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Article  19

Article  21

1. To  avoid  imbalance  in  the  opening  of  gas  markets
during  the  period  referred  to  in  Article  28:

(a)  contracts  for  the  supply  of  gas  under  the  provisions
of Articles 15, 16 and 17 with an eligible customer in
the  system  of  another  Member  State  shall  not  be
prohibited  if  the  customer  is  considered  as  eligible  in
both  systems  involved;

(b) in 

cases  where 

in  only  one  of 

transactions  as  described 

in
subparagraph  (a)  are  refused  because  the  customer  is
eligible 
the
Commission  may  oblige,  taking  into  account  the
situation  in  the  market  and  the  common  interest,  the
refusing  party  to  execute  the  requested  gas  supply,  at
the  request  of  the  Member  State  where  the  eligible
customer  is  located.

two  systems, 

the 

In  parallel  with  the  procedure  and  the  timetable
2.
provided  for  in  Article  28,  and  not  later  than  after
half  of  the  period  provided  for  in  that  Article,  the
Commission shall review the application of paragraph
the  basis  of  market
1(b)  of 
the  common
developments 
interest.  In  the  light  of  experience,  the  Commission
shall  evaluate  this  situation  and  report  on  any
possible imbalance in the opening of gas markets with
regard  to  paragraph  1(b).

this  Article  on 
taking 

into  account 

1. Member  States  shall  ensure  that  the  parties  negotiate
access to the system in good faith and that none of them
abuses  its  negotiating  position  to  prevent  the  successful
outcome  of  such  negotiations.

2. Member States shall designate a competent authority,
which  must  be  independent  of  the  parties,  to  settle
expeditiously  disputes  relating  to  the  negotiations  in
question. In particular, this authority shall settle disputes
concerning  negotiations  and  refusal  of  access  within  the
scope  of  this  Directive.  The  competent  authority  shall
present  its  conclusions  without  delay  or  if  possible  with
12  weeks  of  the  introduction  of  the  dispute.  Recourse  to
this authority shall be without prejudice to the exercise of
rights  of  appeal  under  Community  law.

the  system  of 

3.
In  the  event  of  cross-border  disputes,  the  dispute
settlement  authority  shall  be  the  dispute  settlement
the  natural  gas
authority  covering 
undertaking  which  refuses  use  of,  or  access  to,  the
system.  Where,  in  cross-border  disputes,  more  than  one
such  authority  covers 
the
the 
authorities  shall  consult  with  a  view  to  ensuring  that  the
provisions  of  this  Directive  are  applied  consistently.

system  concerned, 

Article  20

1. Member  States  shall  take  the  necessary  measures  to
enable:

—  natural  gas  undertakings  established  within  their
territory  to  supply  the  customers  described  in  Article
18  of  this  Directive  through  a  direct  line,

—  any  such  eligible  customer  with  their  territory  to  be
line  by  natural  gas

supplied  through  a  direct 
undertakings.

In circumstances where an authorisation (e. g. licence,
2.
permission,  concession,  consent  or  approval)  is  required
for  the  construction  or  operation  of  direct  lines,  the
Member States or any competent authority they designate
shall lay down the criteria for the grant of authorisations
for  the  construction  or  operation  of  such  lines  in  their
territory.  These  criteria  shall  be  objective,  transparent
and  non-discriminatory.

Article  22

Member  States  shall  create  appropriate  and  efficient
mechanisms  for  regulation,  control  and  transparency  so
as  to  avoid  any  abuse  of  a  dominant  position,  in
particular  to  the  detriment  of  consumers,  and  any
predatory  behaviour.  These  mechanisms  shall 
take
account of the provisions of the Treaty, and in particular
Article  86  thereof.

Article  23

1. Member  States  shall  take  the  necessary  measures  to
ensure  that  natural  gas  undertakings  and  customers
required to be eligible under Article 18, wherever they are
located,  are  able  to  obtain  access  to  upstream  pipeline
networks,  including  facilities  supplying  technical  services
incidental to such access, in accordance with this Article,
except for the parts of such networks and facilities which
are  used  for  local  production  operations  at  the  site  of  a
field  where  the  gas  is  produced.  The  measures  shall  be
notified  to  the  Commission  in  accordance  with  the
provisions  of  Article  29.

3. Member States may make authorisations to construct
a  direct  line  subject  either  to  the  refusal  of  system  access
on  the  basis  of  Article  17  or  to  the  opening  of  a  dispute
settlement  procedure  under  Article  21.

2. The  access  referred  to  in  paragraph  1  shall  be
provided in a manner determined by the Member State in
accordance  with  the  relevant  legal  instruments.  Member
States  shall  apply  the  objectives  of  fair  and  open  access,

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achieving  a  competitive  market  in  natural  gas  and
avoiding  any  abuse  of  a  dominant  position,  taking  into
account  security  and  regularity  of  supplies,  capacity
which  is  or  can  reasonably  be  made  available,  and
environmental  protection.  The  following  may  be  taken
into  account:

(a)  the  need 

to  refuse  access  where 

is  an
technical  specifications  which

there 

incompatibility  of 
cannot  be  reasonably  overcome;

(b) the  need  to  avoid  difficulties  which  cannot  be
reasonably  overcome  and  could  prejudice 
the
efficient,  current  and  planned  future  production  of
hydrocarbons,  including  that  from  fields  of  marginal
economic viability;

(c)  the  need  to  respect  the  duly  substantiated  reasonable
needs  of  the  owner  or  operator  of  the  upstream
pipeline  network  for  the  transport  and  processing  of
gas and the interests of all other users of the upstream
pipeline  network  or  relevant  processing  or  handling
facilities  who  may  be  affected;  and

(d) the  need  to  apply  their  laws  and  administrative
procedures,  in  conformity  with  Community  law,  for
the grant of authorisation for production or upstream
development.

3. Member  States  shall  ensure  that  they  have  in  place
dispute  settlement  arrangements,  including  an  authority
independent  of  the  parties  with  access  to  all  relevant
information,  to  enable  disputes  relating  to  access  to
upstream  pipeline  networks  to  be  settled  expeditiously,
taking  into  account  the  criteria  in  paragraph  2  and  the
number  of  parties  which  may  be  involved  in  negotiating
access  to  such  networks.

In  the  event  of  cross-border  disputes,  the  dispute
4.
settlement  arrangements  for  the  Member  State  having
jurisdiction  over  the  upstream  pipeline  network  which
refuses  access  shall  be  applied.  Where,  in  cross-border
disputes,  more  than  one  Member  State  covers  the
network  concerned,  the  Member  State  concerned  shall
consult with a view to ensuring that the provisions of this
Directive  are  applied  consistently.

CHAPTER  VII

FINAL  PROVISIONS

Article  24

1.
In the event of a sudden crisis in the energy market or
where  the  physical  safety  or  security  of  persons,

apparatus  or 
is
threatened,  a  Member  State  may  temporarily  take  the
necessary  safeguard  measures.

installations  or 

integrity 

system 

2. Such  measures 
least  possible
shall  cause 
disturbance to the functioning of the internal market and
shall  not  be  wider  in  scope  than  is  strictly  necessary  to
remedy  the  sudden  difficulties  which  have  arisen.

the 

3. The  Member  State  concerned  shall  without  delay
notify these measures to the other Member States, and to
the  Commission,  which  may  decide  that  the  Member
State  concerned  must  amend  or  abolish  such  measures,
insofar  as  they  distort  competition  and  adversely  affect
trade in a manner which is at variance with the common
interest.

Article  25

1.
If  a  natural  gas  undertaking  encounters,  or  considers
it  would  encounter,  serious  economic  and  financial
difficulties  because  of 
its  take-or-pay  commitments
accepted  in  one  or  more  gas-purchase  contracts,  an
application  for  a  temporary  derogation  from  Article  15
and/or  Article  16  may  be  sent  to  the  Member  State
the  designated  competent  authority.
concerned  or 
Applications  shall,  according  to  the  choice  of  Member
States,  be  presented  on  a  case-by-case  basis  either  before
or  after  refusal  of  access  to  the  system.  Member  States
may  also  give  the  natural  gas  undertaking  the  choice  to
present  an  application  either  before  or  after  refusal  of
access  to  the  system.  Where  a  natural  gas  undertaking
has  refused  access,  the  application  shall  be  presented
without  delay.  The  applications  shall  be  accompanied  by
all  relevant  information  on  the  nature  and  extent  of  the
problem  and  on  the  efforts  undertaken  by  the  gas
undertaking  to  solve  the  problem.

If  alternative  solutions  are  not  reasonably  available,  and
taking  into  account  the  provisions  of  paragraph  3,  the
Member State or the designated competent authority may
decide  to  grant  a  derogation.

2. The  Member  State,  or  the  designated  competent
authority,  shall  notify  the  Commission  without  delay  of
its  decision  to  grant  a  derogation,  together  with  all  the
relevant  information  with  respect  to  the  derogation.  This
information  may  be  submitted  to  the  Commission  in  an
aggregated  form,  enabling  the  Commission  to  reach  a
well-founded decision. Within four weeks of its receipt of
this  notification,  the  Commission  may  request  that  the
Member  State  or  the  designated  competent  authority
concerned  amend  or  withdraw  the  decision  to  grant  a
derogation.  If  the  Member  State  or  the  designated
competent authority concerned does not comply with this

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request  within  a  period  of  four  weeks,  a  final  decision
shall be taken expeditiously in accordance with procedure
I  of  Article  2  of  Decision  87/373/EEC.

The  Commission  shall  preserve  the  confidentiality  of
commercially sensitive information.

3. When  deciding  on  the  derogations  referred  to  in
paragraph  1,  the  Member  State,  or  the  designated
competent authority, and the Commission shall take into
account,  in  particular,  the  following  criteria:

(a)  the  objective  to  achieve  a  competitive  gas  market;

(b) the  need  to  fulfil  public  service  obligations  and  to

ensure  security  of  supply;

(c)  the position of the natural gas undertaking in the gas
market  and  the  actual  state  of  competition  in  this
market;

(d) the  seriousness  of 

financial
difficulties  encountered  by  natural  gas  undertakings
and  transmission  undertakings  or  eligible  customers;

the  economic  and 

(e)  the  dates  of  signature  and  terms  of  the  contract  in
question, including the extent to which they allow for
market  changes;

(f)  the  efforts  made  to  find  a  solution  to  the  problem;

(g)  the  extent  to  which,  when  accepting  the  take-or-pay
commitments  in  question,  the  undertaking  could
reasonably  have  foreseen,  having  regard  to  the
provisions  of  this  Directive,  that  serious  difficulties
were  likely  to  arise;

(h) the  level  of  connection  of  the  system  with  other
systems  and  the  degree  of  interoperability  of  these
systems;  and

(i)  the  effects  the  granting  of  a  derogation  would  have
on the correct application of this Directive as regards
the  smooth  functioning  of  the  internal  natural  gas
market.

it 

is 

A  decision  on  a  request  for  a  derogation  concerning
take-or-pay  contracts  concluded  before  the  entry  into
force  of  this  Directive  should  not  lead  to  a  situation  in
which 
impossible  to  find  economically  viable
alternative outlets. Serious difficulties shall in any case be
deemed not to exist when the sales of natural gas do not
fall  below  the  level  of  minimum  offtake  guarantees
contained  in  gas-purchase  take-or-pay  contracts  or  in  so
far  as  the  relevant  gas-purchase  take-or-pay  contract  can
be adapted or the natural gas undertaking is able to find
alternative  outlets.

4. Natural  gas  undertakings  which  have  not  been
granted  a  derogation  as  referred  to  in  paragraph  1  shall
not refuse, or shall no longer refuse, access to the system
because  of  take-or-pay  commitments  accepted  in  a  gas
purchase  contract.  Member  States  shall  ensure  that  the
relevant  provisions  of  Chapter  VI  are  complied  with.

5. Any  derogation  granted  under  the  above  provisions
shall  be  duly  substantiated.  The  Commission  shall
publish  the  decision  in  the  Offical  Journal  of  the
European  Communities.

6. The  Commission  shall,  within  five  years  of  the  entry
into force of this Directive, submit a review report on the
experience  gained  from  the  application  of  this  Article,  so
as  to  allow  the  European  Parliament  and  the  Council  to
consider,  in  due  course,  the  need  to  adjust  it.

Article  26

to 

1. Member  States  not  directly  connected 
the
interconnected  system  of  any  other  Member  State  and
having  only  one  main  external  supplier  may  derogate
from  Article  4,  Article  18(1),  (2),  (3),  (4)  and  (6)  and/or
Article  20  of  this  Directive.  A  supplier  having  a  market
share  of  more  than  75 %  shall  be  considered  to  be  a
main supplier. This derogation shall automatically expire
from  the  moment  when  at  least  one  of  these  conditions
no  longer  applies.  Any  such  derogation  shall  be  notified
to  the  Commission.

2. A  Member  State,  qualifying  as  an  emergent  market,
which  because  of  the  implementation  of  this  Directive
would  experience  substantial  problems,  not  associated
with the contractual take-or-pay commitments referred to
in Article 25, may derogate from Article 4, Article 18(1),
(2),  (3),  (4)  and  (6)  and/or  Article  20  of  this  Directive.
This  derogation  shall  automatically  expire  from  the
moment when the Member State no longer qualifies as an
emergent  market.  Any  such  derogation  shall  be  notified
to  the  Commission.

3. Where  implementation  of  this  Directive  would  cause
substantial problems in a geographically limited area of a
Member  State,  in  particular  concerning  the  development
of  the  transmission  infrastructure,  and  with  a  view  to
encouraging investments, the Member State may apply to
the Commission for a temporary derogation from Article
4, Article 18(1), (2), (3), (4) and (6) and/or Article 20 for
developments  within  this  area.

4. The Commission may grant the derogation referred to
in  paragraph  3,  taking  into  account,  in  particular,  the
following criteria:

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—  the  need  for  infrastructure  investments,  which  would
not be economical to operate in a competitive market
environment,

—  the  level  and  pay-back  prospects  of  investments

required,

—  the  size  and  maturity  of  the  gas  system  in  the  area

concerned,

—  the  prospects  for  the  gas  market  concerned,

—  the geographical size and characteristics of the area or

region  concerned,  and

Article  28

The  Commission  shall  review  the  application  of  this
Directive  and  submit  a  report  on  the  experience  gained
on  the  functioning  of  the  internal  market  in  natural  gas
and the implementation of the general rules mentioned in
Article  3  in  order  to  allow  the  European  Parliament  and
the Council, in the light of experience gained, to consider,
in  due  time,  the  possibility  of  provisions  for  further
improving  the  internal  market  in  natural  gas,  which
would  be  effective  10  years  after  the  entry  into  force  of
the  Directive.

—  socio-economic  and  demographic  factors.

Article  29

A derogation may be granted only if no gas infrastructure
has  been  established  in  this  area,  or  has  been  so
established  for 
less  than  10  years.  The  temporary
derogation may not exceed 10 years from the time gas is
first  supplied  in  the  area.

Member States shall bring into force the laws, regulations
and  administrative  provisions  necessary  to  comply  with
this  Directive  no  later  than  two  years  from  the  date
specified  in  Article  30.  They  shall  forthwith  inform  the
Commission  thereof.

5. The  Commission  shall  inform  the  Member  States  of
applications  made  under  paragraphs  3  prior  to  taking  a
decision  pursuant  to  paragraph  4,  taking  into  account
respect  for  confidentiality.  This  decision,  as  well  as  the
derogations  referred  to  in  paragraphs  1  and  2,  shall  be
published 
in  the  Official  Journal  of  the  European
Communities.

When  Member  States  adopt  these  provisions,  they  shall
contain  a  reference  to  this  Directive  or  shall  be
accompanied  by  such  reference  on  the  occasion  of  their
official  publication.  The  methods  of  making  such
reference  shall  be  laid  down  by  the  Member  States.

Article  30

Article  27

This Directive shall enter into force on the twentieth day
following that of its publication in the Official Journal of
the  European  Communities.

1. Before  the  end  of  the  first  year  following  the  entry
into  force  of  this  Directive,  the  Commission  shall  submit
a  report  of  the  European  Parliament  and  the  Council  on
harmonisation  requirements  which  are  not  linked  to  the
provisions of this Directive. If necessary, the Commission
shall  attach  to  the  report  any  harmonisation  proposals
necessary  for  the  effective  operation  of  the  internal
natural  gas  market.

Article  31

This  Directive  is  addressed  to  the  Member  States.

Done  at  . . .

2. The  European  Parliament  and  the  Council  shall  give
their  views  on  such  proposals  within  two  years  of  their
submission.

For  the  European  Parliament

For  the  Council

The  President

The  President

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26.3.98

STATEMENT  OF  THE  COUNCIL’S  REASONS

I. 

INTRODUCTION

1.  On 24 February 1992, the Commission forwarded to the Council a proposal based on
Articles  57(2),  66  et  100A  of  the  EC  Treaty  concerning  common  rules  for  the  internal
market  in  natural  gas.

2.  The  European  Parliament  delivered  its  opinion  on  17  November  1993.

The  Economic  and  Social  Committee  delivered  its  opinion  on  27  January  1993.

3.  On  11  February  1994,  the  Commission  forwarded  an  amended  proposal  to  the

European  Parliament  and  the  Council.

4.  On  12  February  1998,  the  Council  adopted  its  common  position  pursuant  to  Article

189b  of  the  Treaty.

II.  OBJECTIVES  AND  SCOPE

5.  The  purpose  of  the  proposal  for  a  Directive  is  to  take  a  further  step  towards  the
completion  of  the  internal  energy  market  by  establishing  common  rules  for  the
transmission,  distribution,  supply  and  storage  of  natural  gas.  It  lays  down  the  rules
relating  to  the  organisation  and  functioning  of  the  natural  gas  sector,  including
liquefied  natural  gas,  access  to  the  market,  the  operation  of  systems,  and  the  criteria
and  procedures  applicable  to  the  granting  of  authorisations  for  transmission,
distribution,  supply  and  storage  of  natural  gas.

III.  ANALYSIS  OF  THE  COMMON  POSITION

6.  The Council reached an agreement on the text of the common position on the basis of

the  following  general  outline:

(a)  the recently adopted Directive for the internal market in electricity has served as the
basis during the discussion. Objective reasons have been put forward in those cases
where  this  Directive  differ  from  the  Directive  for  the  internal  market  in  electricity;

(b) the  proposed  Directive  introduces  competition  in  the  natural  gas  sector  in  order  to
enhance  the  competitivity  of  the  Community  and  to  strengthen  security  of  supply,
while  at  the  same  time  ensuring  public  service  obligations;

(c)  the  internal  market  in  natural  gas  shall  be  opened  gradually  on  the  basis  of  both
qualitative  and  quantitative  criteria,  but  Member  States  may  open  their  markets
more  quickly  than  required  by  the  Directive  if  they  wish;

(d) the internal market in natural gas shall be achieved by creating a right of access to
the system and by making it possible to build new parallel pipelines. Member States
may  choose  a  system  of  either  negotiated  or  regulatory  access,  or  both;

(e)  access  to  upstream  pipeline  networks  is  needed  to  achieve  a  competitive  market  in
natural  gas,  but  such  access  should  have  regard  to  the  special  economic,  technical
and  operational  characteristics  of  such  networks;

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(f)  access  to  the  system  and  authorisation  to  build  and/or  operate  systems  should  be

based  on  the  principles  of  objectivity,  transparency  and  non-discrimination;

(g)  refusal  of  access  to  the  system  shall  be  possible  under  certain  circumstances;  such
refusals must be duly substantiated. An independent authority shall be designated in
each  Member  State  to  settle  disputes  in  relation  to  access  to  the  system;

(h) derogations  shall  be  possible  in  certain  cases  to  take  account  of  specificities  of  the
natural gas market; in particular, such derogations may be granted in order to avoid
serious  economic  and  financial  difficulties  because  to  take-or-pay  commitments;

(i)  the  differences  between  the  national  system  have  been  recognised;  thus,  temporary
derogations  shall  also  be  possible  concerning  national  markets  and  other
geographically  limited  areas  which  have  not  yet  reached  a  developed  natural  gas
market.

7.  The  Council  has  unanimously  and  with  the  support  of  the  Commission  been  able  to

adopt  a  large  part  of  the  amendments  requested  by  the  European  Parliament.

The  Council  has,  verbatim  or  in  substance  and,  in  some  cases,  partly,  adopted  the
proposed  amendments  112,  113,  120,  124,  126,  129,  136,  137,  139,  142,  145,  146,
151, 154, 155, 158, 162, 169, 172, 173, 175, 179, 180, 184, 185, 186, 187, 191, 192,
196,  197,  198,  201,  202,  212,  213,  219  and  234.  These  proposed  amendments  were
already  taken  up  by  the  Commission  in  its  amended  proposals  of  11  February  1994,
with  the  exception  of  proposed  amendments  142,  175,  179,  184,  185  and  192,  which
were  at  that  time  not  accepted  by  the  Commission.

The  Council  has  carefully  examined  the  other  amendments  proposed  by  the  European
Parliament.  Since  the  outcome  of  the  discussion  within  the  Council  has  led  to  a  total
reorganisation  of  the  Directive,  it  has  been  deemed  not  opportune  to  adopt  the  other
proposed  amendments.