COMMISSION STAFF WORKING DOCUMENT Assessing the amendments to Directive 2009/73/EC setting out rules for gas pipelines connecting the European Union with third countries Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2009/73/EC concerning common rules for the internal market in natural gas
Date: 2017-11-08
Institutions: Directorate-General for Energy, European Commission
Subjects: energy grid, gas pipeline, gas supply, import (EU), natural gas, security of supply, single market, third country

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 8.11.2017  SWD(2017) 368 final  COMMISSION STAFF WORKING DOCUMENT Assessing the amendments to Directive 2009/73/EC setting out rules for gas pipelines connecting the European Union with third countries  Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2009/73/EC concerning common rules for the internal market in natural gas  {COM(2017) 660 final}  
 
 
INTRODUCTION 

The regulatory framework for the operation of gas pipelines within the Union is set out in the 
Third Energy Package.1  

Directive  2009/73/EC2  (hereinafter  "the  Gas  Directive")  establishes  common  rules  for  the 
transmission, distribution, supply and storage of natural gas. 

By Commission Proposal (xxx(2017)), it is intended to amend the Gas Directive in order to 
specify  the  scope  of  its  application  so  that  it  expressly  includes  gas  pipelines  connecting 
Member States with third countries.  

In the Gas Directive, transmission lines "which cross or span a border between Member States 
for the sole purpose of connecting the national transmission systems of those Member States"3 
are  defined  as  'interconnectors'.  Pipelines  connecting  Member  States  with  third  countries 
currently  do  not  fall  under  this  definition.  For  this  and  other  reasons,  such  pipelines  do  not 
explicitly fall into the scope of the Third Energy Package. The present proposal specifies the 
exact scope of application of the Gas Directive. It sets  out that within the borders of  Union 
jurisdiction, pipelines to and from third countries are to be regarded as "interconnectors" and 
thus  fall  within  the  scope  of  the  Gas  Directive,  clearly  establishing  that  such  pipelines  are 
subject  to  the  rules  set  out  therein.  The  proposal  also  clarifies  procedural  provisions  on 
pipelines  to  and  from  third  countries.  Finally,  the  proposal  provides  for  the  possibility  for 
Member States to derogate, for a limited period and where appropriate subject to conditions, 
existing pipelines to and from third countries from the application of the main provisions of 
the Gas Directive. 

The present staff working document accompanies Commission Proposal (xxx(2017)). It sets 
out  the  motivation  and  objectives  for  the  proposed  amendment  and  assesses  the  expected 
impact as regards existing and future gas pipelines to and from third countries.  

The  proposal  follows  up  on  President  Juncker's  announcement  in  his  Letter  of  Intent 
accompanying the State of the Union 20174 that the Commission will propose common rules 
for gas pipelines entering the European internal gas market as an initiative to be completed by 
end 2018. 

BACKGROUND 

Regulation of gas transmission systems 

The regulatory  framework for the operation of gas  transmission  systems in  the Union is  set 
out  in  the  Third  Energy  Package,  notably  in  the  Gas  Directive,  in  Regulation  (EC)  No 

Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning 

The so-called Third Energy Package consists of Regulation (EC) No 713/2009, Regulation (EC) No 

1 
714/2009, Regulation (EC) No 715/2009, Directive 2009/72/EC and Directive 2009/73/EC. 
2  
common rules for the internal market in natural gas and repealing Directive 2003/55/EC, OJ L 211, 14.8.2009, 
p. 94–136.  
3  
4  
Priority 3: A resilient Energy Union with a forward-looking climate change policy. 

Cf. Article 2(17) Gas Directive. 
State of the Union 2017, Letter of Intent to President Antonio Tajani and to Prime Minister Jüri Ratas, 

1 

 
 
                                                            
715/2009  (hereinafter  'the  Gas  Regulation')  and  in  the  Commission  Regulations  setting  out 
Network Codes for gas5 (hereinafter 'the Network Codes').  

The  objective  of  these  rules  is  the  creation  of  an  internal  market  in  natural  gas,  so  as  to 
achieve efficiency gains, competitive prices, and higher standards of service, and to contribute 
to  security  of  supply  and  sustainability.6  Due  to  the  cost  of  installation  and  their  technical 
specificities,  it  is  not  viable  to  construct  and  maintain  multiple  parallel  gas  transmission 
systems. Therefore, gas transmission systems are regarded as natural monopolies. Among the 
core principles of this regulatory framework are thus the obligation to implement a system of 
third  party  access  to  transmission  systems,7  the  separation  of  gas  production  and  supply 
activities  from  activities  of  gas  transmission  via  the  unbundling  of  transmission  system 
operators,8  and  the  obligation  on  national  regulatory  authorities  to  set  or  approve  non-
discriminatory and cost-reflective tariffs for the use of transmission systems.9  

The application of these core principles seeks to ensure that undertakings that compete on the 
market for the supply of natural gas can access transmission systems across the Union under 
non-discriminatory conditions in order to deliver their products. 

Whereas  the  possibility  to  grant  partial  exemptions  from  the  above-mentioned  principles 
exists for new infrastructure, it is subject to specific conditions10, notably that the investments 
enhance competition and security of gas supply in the Union. 

Substantive scope of the Gas Directive 

The rules set out in the Gas Directive and the Gas Regulation apply to "transmission systems" 
and  to  "transmission  system  operators".  Certain  provisions,  notably  the  possibility  to  grant 
partial  exemptions  from  the  requirements  of  the  Gas  Directive,11  apply  specifically  to 
'interconnectors'.  

It  follows  from  the  definition  of  the  term  'interconnector'  that  the  transmission  systems  and 
transmission lines connecting Member States are subject to the regulatory requirements set in 
the  Gas  Directive.  Conversely,  transmission  lines  connecting  Member  States  with  third 
countries do not fall under the definition of 'interconnector' in the Gas Directive. As a result, 
such  infrastructure  projects  are  not  eligible  for  exemptions  granted  to  major  new 
infrastructure pursuant to Article 36 Gas Directive.  

Moreover,  the  rules  set  out  in  the  Gas  Directive  governing  the  key  aspects  of  third-party 
access, unbundling and tariff regulation do not expressly provide for their application to gas 
pipelines connecting a Member State with a third country. While several provisions provide 
for close cross-border cooperation between national regulatory authorities of Member States 
in  applying  the  Directive,  no  such  cooperation  is  provided  for  as  regards  third  country 
authorities.  By  comparison,  the  provisions  on  the  certification  of  transmission  system 

5 
6 
7 
8 
9 
10 
11 

See http://ec.europa.eu/energy/node/54 for further information.  
Cf. Recital 1 Gas Directive. 
Cf. Article 32 Gas Directive. 
Cf. Article 9 Gas Directive. 
Cf. Article 13 Gas Regulation. 
Cf. Article 36 Gas Directive. 
Cf. Article 36 Gas Directive. 

2 

 
 
                                                            
operators12  envisage  specific  requirements  for  the  participation  of  persons  from  third 
countries.  In  the  absence  of  such  specific  rules,  the  applicability  of  third  party  access, 
unbundling and tariff regulation requirements to pipelines to and from third countries could 
not be ascertained and it has been concluded that the Union legislator, when adopting the Gas 
Directive, has not expressly foreseen its application to pipelines crossing an external border of 
the Union. 

NEED FOR LEGISLATIVE ACTION 

As  outlined  above,  the  Gas  Directive  does  not  expressly  regulate  the  operation  of  gas 
pipelines  connecting  Member  States  with  third  countries.  In  the  absence  of  applicable 
regulatory rules at Union level, the operation of such infrastructure could be regulated at the 
national  level  in  the  law  of  the  respective  Member  States.  For  infrastructure  entering  the 
Union from a third country and thereafter crossing several Member States, this could result in 
the application of different rules to one and the same pipeline within the Union and thus  to 
regulatory conflicts, legal uncertainty and distortion of competition within the Union internal 
energy  market.  Furthermore,  there  would  be  no  guarantee  that  the  respective  national 
framework is compatible with Union rules applicable to infrastructure directly downstream of 
the  infrastructure  in  question,  or  that  the  national  framework  prevents  negative  market 
impacts  in  other  Member  States.  Absent  national  rules,  such  pipeline  could  de  facto  be 
operated exclusively in accordance with the law of the third country to which it connects. 

Furthermore, the lack of Union-wide rules in the area may be detrimental for the achievement 
of the Union's energy policy objectives set out in Article 194 TFEU. The Union imports most 
of  its  natural  gas  consumption  via  pipelines  from  third  countries13,  and  gas  has  to  be  often 
transported  over  several  national  borders  before  reaching  the  place  where  it  is  actually 
consumed.  The  applicable  legal  framework  under  which  these  gas  imports  are  carried  out, 
including  the  rules  applicable  to  the  operation  of  the  respective  pipelines,  can  therefore 
significantly  affect  the  functioning  of  gas  markets  within  the  Union  and  the  security  of  gas 
supply of European citizens. 

A transparent and effective legal framework for infrastructure to and from third countries is of 
high  importance  for  the  well-functioning  of  the  internal  energy  market  (Article 194 (1) (a) 
TFEU) and security of supply (Article 194 (1) (b) TFEU): 

The introduction  of third party  access  requirements for domestic pipeline infrastructure was 
motivated  by  the  experience  acquired  in  the  deregulation  of  Union  gas  markets  and  the 
findings  that  in  the  absence  of  non-discriminatory  access  to  transmission  infrastructure, 
competition  on  commodity  markets  would  be  seriously  hampered  to  the  detriment  of 
customers.14  Without  an  effective  third-party  access  regime,  individual  suppliers  could  gain 
unduly privileged access to the Union market and downstream infrastructure.  

Investments  in  large  pipelines  usually  require  considerable  investments  in  connected 
infrastructure in the EU. For this infrastructure, potentially a significant share of the costs will 

Cf. Article 11 Gas Directive. 
The EU's gas demand in 2016 was 465 bcm of which 70.4% has been covered by imports. 87% of the 

12 
13 
imported volumes were transported via pipelines, while 13% came from LNG (cf. Quarterly Report on European 
Gas Markets, Vol. 10, http://ec.europa.eu/energy/en/data-analysis/market-analysis). 
14 

Cf. DG COMP sector inquiry of 2005. 

3 

 
 
                                                            
ultimately  be  borne  –  via  regulated  transmission  tariffs  –  by  EU  gas  customers.  Certain 
pipelines can, because of their importance for market integration and security of supply, also 
benefit  from  direct  public  funding,  for  instance  via  the  Connecting  Europe  Facility.15 
Applying  the  principles  of  regulated  third  party  access,  unbundling  and  transparency  to 
interconnectors  to  and  from  third  countries  is  fundamental  to  ensure  that  competition  is 
effective,  security  of  supply  is  ensured  and  stranded  assets  and  inefficient  investments  are 
avoided to the best possible extent. 

A lack of transparency in the operation of pipelines to and from third countries can be a risk 
factor  from  a  security  of  supply  perspective.  Therefore,  it  is  important  to  ensure  that 
information on the operation and maintenance of important infrastructure are made available 
to  the  market,  and  can  be  used  by  relevant  national  and  EU  authorities,  including  relevant 
competent authorities in the meaning of the Gas SoS Regulation 994/2010.16  

THE PROPOSED AMENDMENTS 

The proposed amendments can be categorised as follows: 

 Specification of the scope 

By  amending  the  definition  of  'interconnector'  as  well  as  certain  provisions  related  to 
pipelines to and from third countries as described below, the legislator's intention to apply the 
substantive rules set out in the Gas Directive and in related acts also to pipelines connecting 
third countries to the European Union is expressed. 

Adjustment of unbundling rules 

The use of unbundling models other than ownership unbundling was made conditional on the 
vertical integration of transmission infrastructure at a specific date, i.e. 3 September 2009. In 
order to ensure that pipelines to and from third countries are not treated less favourably than 
domestic infrastructure, a new reference date is set for the application of Article 9(8) and (9) 
of the Gas Directive. This will allow the use of alternative unbundling models in cases where 
pipelines to and from third countries belonged to vertically integrated undertakings at the date 
of adoption of this proposal. 

Consultation requirements  

In order to facilitate the operation of infrastructure to and from third countries, the regulatory 
authorities  of  the  Member  States  in  question  should  endeavour  to  consult  with  the  relevant 
authorities of third countries aiming at, as regards this infrastructure, consistent application of 
the  provisions  of  this  Directive  up  to  the  border  of  EU  jurisdiction.  In  particular,  such 
consultation should be carried out before deciding on an application for an exemption for new 
infrastructure pursuant to Article 36 Gas Directive.  

https://ec.europa.eu/inea/en/connecting-europe-facility/cef-energy. 
Regulation (EU) No 994/2010 of the European Parliament and of the Council of 20 October 2010 

15 
16 
concerning measures to safeguard security of gas supply and repealing Council Directive 2004/67/EC, OJ L 295, 
12.11.2010, p. 1. The Commission proposal COM(2016)0052, on which an interinstitutional agreement was 
found on 16 May 2017, intends to repeal this Regulation. 

4 

 
 
                                                            
Possibility to derogate from certain rules in the Gas Directive 

The new Article 49(9) envisages that a Member State may grant a derogation for existing gas 
pipelines  to  and  from  third  countries  from  the  provisions  of  Articles  9,  10,  11  and  32  and 
Article  41(6),  (8)  and  (10)  of  the  Gas  Directive.  This  possibility  should  ensure  that  there  is 
sufficient  flexibility  to  avoid  any  adverse  effects  of  the  proposed  application  of  EU  market 
rules to such infrastructure. Thereby, due account is also taken of the lack of specific rules in 
this  area  since  the  adoption  the  Gas  Directive  in  2009.  By  providing  for  time-limited 
derogations  which  may  be  made  subject  to  conditions,  Member  States  are  enabled  to 
progressively  adapt  the  regulatory  framework  on  these  pipelines,  moving  it  closer  to  full 
application of the principles where appropriate. 

NO NECESSITY FOR A SEPARATE IMPACT ASSESSMENT 

The  present  initiative  does  not  require  a  detailed  impact  assessment.  First  and  foremost,  it 
aims  at  achieving  a  legal  situation  which  reflects  the  common  practice  of  applying  core 
principles  of  the  regulatory  framework  set  out  in  the  Gas  Directive  in  relation  to  third 
countries, notably via intergovernmental agreements. Furthermore, the proposed amendments 
to the Gas Directive are limited both in terms of substance and quantity and do not introduce 
rules  for  pipelines  to  and  from  third  countries  which  differ  substantially  from  the  rules 
applicable  to  pipelines  within  the  EU's  territory.  Finally,  there  is  an  established  practice  of 
applying  core  principles  of  the  regulatory  framework  set  out  in  the  Gas  Directive  (in 
particular third party access, unbundling, tariff regulation and transparency requirements)  in 
relation to third countries. This is particularly evidenced by the fact that these principles are 
incorporated in international agreements between Member States and third countries as well 
as  between  the  Union  and  third  countries  and  have  been  consistently  applied  to  onshore 
pipelines  to  and  from  third  countries.  In  these  instances,  the  present  proposal  provides 
additional  transparency  and  legal  certainty  but  results  in  limited  changes  to  the  applicable 
legal standard.  

SCOPE AND LEGAL IMPACT OF THE AMENDMENT  

The  proposed  amendments  expressly  establish  that  the  Gas  Directive  as  well  as  the  Gas 
Regulation apply to gas pipelines connecting third countries with the EU.  

This has in particular the following legal consequences  

   The  concerned  pipelines  have  to  offer  non-discriminatory  third  party  access.  This 
means  that  all  interested  parties  must  get  equal  opportunities  to  access  capacity, 
pursuant to Article 32 of the Gas Directive as well as Articles 14 and 16 of the Gas 
Regulation.   

the  competent  national  regulatory  authority  (or  authorities, 

   Network tariffs need to be set in a non-discriminatory way and subject to the approval 
by 
the 
infrastructure  crosses  several  Member  States),  pursuant  to  Article  41  (1)  of  the  Gas 
Directive and Article 13 of the Gas Regulation. 

in  case 

   The transmission system operator of the pipeline has to undergo unbundling pursuant 
to Article 9 of the Gas Directive. According to Article 9(8) Gas Directive, where on 3 

5 

 
 
 
  
September 2009 a transmission system belonged to a vertically integrated undertaking, 
unbundling can occur on the basis of one of the alternative unbundling models under 
the Gas Directive (ITO or ISO). As the proposed application of the unbundling rules to 
existing  pipelines  to  and  from  third  countries  may  require  a  restructuring  of 
ownership,  the  amendments  envisage  the  possibility  to  apply  these  alternative 
unbundling models where such pipelines belong to a vertically integrated undertaking 
at the date of adoption of the present proposal. Otherwise, full ownership unbundling 
applies.  

   Transparency requirements under the Gas Directive and the Gas Regulation (notably 

Article 18 thereof) become applicable.   

   New pipelines to and from third countries could request exemptions from unbundling, 
third party access and/or tariff regulation pursuant to Article 36 of the Gas Directive. 
As  existing  infrastructure  cannot  meet  the  "risk"  criterion  of  Article  36,  existing 
infrastructure could not request an exemption (but could be subject to derogation, see 
below).  

   Where the existing regulatory framework of the pipeline, in particular on the basis of 
third country legislation, substantially differs from the respective EU rules, a so-called 
"conflict of laws" can occur. Resolving contradicting requirements and ensuring legal 
certainty  could  be  achieved  by  concluding  an 
intergovernmental  agreement 
establishing a specific regulatory framework for the operation of such pipeline.   

   Network codes, to a large extent, do not apply to pipelines to and from third countries. 
This is due to specific provisions clarifying their scope. By way of example, Article 2 
(1) of the Network Code on capacity allocation mechanisms (Commission Regulation 
(EU) 2017/459) expressly states that entry and exit points to third countries are only 
subject  to  its  requirements  where  this  has  been  decided  by  the  relevant  national 
regulatory authority. The non-application of this Network Code automatically results 
in  non-application  of  major  parts  of  Commission  Regulation  (EU)  2017/460  of  16 
March 2017 establishing a network code on harmonised transmission tariff structures 
for gas  (see Article 2 (1) thereof)  although  certain  provisions (notably Chapters I, II 
and  IV)  of  this  Commission  Regulation  do  apply.  The  proposed  amendments  will 
therefore only have a limited impact on the applicability of network codes. 

   The  application  of  the  aforementioned  rules  to  existing  pipelines  to  and  from  third 
countries  may  in  some  cases  be  considered  unsuitable  or  difficult  to  implement  in 
practice, including in cases where the operation of such infrastructure is governed by 
existing  international  agreements  with  third  countries.  Therefore,  the  proposal 
envisages the possibility for Member States to grant derogations from the application 
of Articles 9, 10, 11 and 32  and Article 41(6), (8) and (10) of the Gas Directive for 
existing  gas  pipelines  to  and  from  third  countries.  Such  derogations  shall  -  as  is 
existing  practice  for  exemption  decisions  -  be  limited  in  time  and  may  be  subject to 
conditions.    In  order  to  ensure  a  coherent  legal  framework  for  pipelines  passing 
through more than one Member State, the decision to grant a derogation shall be taken 
by  the  Member  State  in  the  jurisdiction  of  which  the  first  interconnection  point  is 
located. 

6 

 
 
 
 
 
 
 
ECONOMIC IMPACT 

The Third Energy package was targeted, inter alia, at resolving: 

  market concentration and market power; 
  vertical foreclosure (in particular the inadequate unbundling of network and supply); 
 

lack  of  market  integration  (including  lack  of  regulatory  oversight  for  cross-border 
issues); 
lack of transparency; inefficient price formation mechanisms; lack of competition on 
downstream markets for gas. 

 

Most  of  the  problems  identified  by  the  legislator  are  linked  to  the  existence  of  vertically 
integrated  companies,  which  not  only  control  essential  facilities  (such  as  gas  transport 
networks)  but  also  enjoy  significant  market  power  in  the  wholesale  and  sometimes  retail 
markets.  Taking  into  account  that  the  European  Union  showed  an  import  dependency  for 
natural gas of 70.4% in 2016 with a rising tendency due to declining domestic production, not 
applying  the  Third  Energy  Package  to  gas  pipelines  connecting  third  countries  with  the 
European Union would result in depriving the internal energy market of the full potential of 
economic and security of supply benefits resulting from the application of the market rules set 
out in the Third Energy Package.  

Without  unbundling,  regulated  third  party  access  and  tariff  regulation,  the  owner  of  a  gas 
pipeline connecting third countries with the European Union can effectively control access to 
the  internal  energy  market  (or  parts  thereof)  and  thereby  has  an  impact  on  the  level  of 
downstream  competition  and  security  of  supply  in  this  market  area.  Restrictions  to  market 
entry and market integration would persist, should the regulatory status quo continue. 

Applying the Third Energy Package rules to gas pipelines connecting third countries with the 
European Union may positively impact on the access to upstream supply projects leading to 
an increase of competition not only in the downstream, but also in the upstream market. The 
proposal  does  however  not  impact  on  the  freedom  of  choice  how  to  organise  the  upstream 
market in a third country. Nevertheless, assuming that there are several suppliers active in the 
upstream  market,  applying  third  party  access  rules  on  interconnectors  with  third  countries 
would increase available sources, thereby leading to both, a diversification of sources in terms 
of  supply  companies,  as  well  as  to  a  higher  level  of  competition.  Due  to  the  economies  of 
scale and scope, providing access to third  parties should reduce  the cost of transporting  gas 
from different production sources located in the same geographical area. Overall this should 
lead to efficiency gains, while the analysis on the impact of ownership unbundling on credit 
ratings  and  thereby  also  on  the  financing  costs  for  new  interconnectors  did  not  show  a 
negative impact17.   

Efficiency improvements in the gas sector lead to lower energy prices, which in turn impact 
on the rest of the economy. Generally it is assumed that the quantitative analysis of economic 

Comparing the credit ratings of vertically integrated companies to energy companies without network 

17 
assets, no significant or systematic differences were observed in the Impact Assessment for the Third Energy 
package. 

7 

 
 
 
 
                                                            
 
impacts as conducted for the Third Energy Package would show similar positive impacts on 
prices and GDP for the current proposal.  

IMPACT ON THE REALISATION OF PLANNED PIPELINES  

The  amendments,  by  expressly  establishing  the  application  of  the  Gas  Directive  and  Gas 
Regulation  to  pipelines  to  and  from  third  countries,  would  ensure  that  such  infrastructure 
projects could be realised and operated applying the relevant provisions of the Gas Directive 
and  Gas  Regulation  (including,  where  no  more  specific  provisions  are  included,  the  related 
legal  acts  like  network  codes  and  guidelines).  Many  pipeline  projects  inside  the  EU,  and 
several  pipeline  projects  connected  to  third  countries,  were  realised  in  full  respect  of  those 
requirements. 

Where the application of these rules to existing pipelines to and from third countries would 
prove unsuitable or impossible in practice, Member States could decide to grant a derogation 
from  the  application  of  key  requirements  set  out  in  Articles  9,  10,  11  and  32    and  Article 
41(6),  (8)  and  (10)  of  the  Gas  Directive.  The  possibility  ensures  that  there  is  sufficient 
flexibility to avoid any adverse effects of the present extension of the applicability of Union 
market rules to such infrastructure.   

Furthermore, where the risk of new pipeline projects would be such that full application of the 
Gas Directive would prevent the investment, the project promoter could request an exemption 
under Article 36 of the Gas Directive. Were both the national authorities and the Commission 
find  an  exemption  request  to  be  justified,  a  project-specific  regulatory  framework  could  be 
granted. 

CONTRADICTING LEGAL FRAMEWORKS 

The  proposed  explicit  application  of  the  rules  of  the  Gas  Directive  as  well  as  of  the  Gas 
Regulation to a pipeline to and from third countries can result in conflicts between different 
legal regimes.  

Where a contradicting framework results from the national law of a Member State, it has to be 
adapted accordingly.  

The  question  is  more  complex  where  the  conflicting  framework  is  based  on  third  country 
legislation and/or intergovernmental agreements, as will often be the case. In this context, it 
has to be borne in mind that a pipeline from a third country may cross different territories and 
is therefore, in its different parts, subject to different jurisdictions – that of the third country 
and at least that of the Member State(s).  

This may result in the application of two conflicting regulatory regimes  – that of the Union 
and  that  of  the  third  country  –  to  a  single  pipeline  and  thus  in  a  "conflict  of  laws".  Such 
"conflicts of laws" do not as such prevent the application of Union law.   

In  order  to  provide  for  a  single  and  coherent  framework,  the  conclusion  of  an 
intergovernmental agreement with the third country is a possible solution. Such an agreement 
could  either  specifically  cover  a  given  project,  or  generally  agree  on  the  framework  for  all 
projects between the contracting parties.  

8 

 
 
An  agreement  between  the  Union  and  the  third  country  would,  depending  on  its  content, 
prevail over the Gas Directive as well as the Gas Regulation.  

If the international agreement is concluded between a Member State and the third country and 
if this agreement is incompatible with the Gas Directive and/or Gas Regulation, the Member 
States  concerned  must  thus  take  all  appropriate  steps  to  eliminate  the  incompatibilities 
between Union law and the agreement in question (Articles 351 (2) TFEU and 4 (3) TEU).18 
This  means  that  the  Member  State  must  renegotiate  or  terminate  the  agreement  where 
appropriate. For the termination or renegotiation of international agreements the rules under 
public international law apply. Termination or renegotiation are, first of all, possible if and to 
the extent that the termination or amendment is expressly foreseen in the agreement. In some 
specific  cases,  Member  States  may  also  have  recourse  to  the  termination  and  adaptation 
grounds set out in the Vienna Convention of the Law of the Treaties.  

Where the application of these rules to existing pipelines to and from third countries would be 
unsuitable  due  to  the  existence  of  bilateral  intergovernmental  agreements,  Member  States 
could  decide  to  grant  a  derogation  from  the  application  of  key  requirements  set  out  in 
Articles 9, 10, 11 and 32 and Article 41(6), (8) and (10) of the Gas Directive. 

As an exception, Article 351 (1) TFEU allows Member States to fulfil their obligations arising from 

18 
international agreement with third countries. However, this applies only to international agreement that were 
signed before the respective MS joined the Union. Furthermore, Article 351 (2) TFEU requires Member States 
to take all appropriate steps to eliminate incompatibilities between international agreements and the Treaties. 

9