Unbundling refers to effective separation between the operation of electricity and gas transmission networks from supply and generation activities.
If the reform is approved, the largest European companies, such as Germany's E.ON or France's EDF, will be split, and Russia's Gazprom will not be allowed to buy European assets.
However, judging by the Russian company's decision to give a 24% stake in the project to develop and operate the Shtokman gas condensate deposit in the country's north to the Norwegian company, Statoil-Hydro, Gazprom does not intend to act in kind against Europe.
Moreover, the decision to involve the Norwegians, which are also likely to suffer from the new European regulations, could be a way of rallying those irked by Brussels' initiative.
Gazprom's package probably included not only the obligatory resignation of Norway's Petroleum and Energy Minister Odd Roger Enoksen, who stepped down Friday September 21, but also an idea of united opposition to the new energy directives.
On September 19, the European Commission presented a package of five bills to regulate the gas and energy market of the European Union. It aims to divide the market into generation and distribution sectors, protect European companies from foreign investment, and "unbundle" overseas businesses.
The Commission proposed banning single companies from controlling both the production and transportation of electricity and gas. Such companies must either sell their transportation networks, whose main assets are electricity grids and gas pipelines, or turn them over to independent operators.
Compliance with the new regulations will be monitored by a supranational control body called the Agency for the Cooperation of Energy Regulators, or ACER. It will oversee the drafting of common tariff, regulation and competition policies for the national EU regulators, and monitor the European energy market.
In other words, Brussels intends to establish a bureaucratic structure to control the energy market, a task openly formulated by Energy Commissioner Andris Piebalgs.
The authors of the new proposals believe they can take over control of electricity and gas transportation from national companies. In their opinion, this would boost the development of competition in the energy market and protect them from arbitrary pricing policies.
Large European companies have been unnerved by these proposals. First Germany and France, and then Austria and Italy, expressed their outrage. A spokesman for the German Ministry of Economics and Technology told Reuters: "The proposals come very close to a de facto divestiture."
They are much tougher than the June directives of the Council of Europe, in which gas and electricity companies' transmission assets were to be given only legal and operational independence.
Now the EU officials insist that these companies hive off their transmission networks from the production business into separate companies. The same goes for gas storage facilities, which are part of the gas supply infrastructure.
The European Commission's minor concession entails that electricity and natural gas producers may not sell their transmission networks, but spin off that business or hand over operation of the grid to an independent company. The latter looks strange, because in this case the owner will not even receive financial compensation for his investments.
The current shareholders of European companies are unhappy with the idea of "unbundling," because capitalization largely rests on the "scale effect." If their companies unbundle, the combined value of the new companies will not necessarily equal that of the former united company.
The European Commission has also spread the ban on control over transmission networks to non-EU electricity and natural gas producers. Moreover, non-EU states are to be denied control over the EU countries' natural gas and electricity networks unless the country in question signs a relevant agreement.
The secret goal of the Eurocrats is quite obvious: to pave the way for European companies' access to Russian mineral resources and pipelines by forcing Russia to ratify the Energy Charter Treaty.
Jose Manuel Barroso, president of the European Commission, clearly referred to Russia when he said: "In practice, third-country individuals and companies should not be able to acquire control over a community transmission network unless there is an agreement between the community and the company's country of origin."
So the main reason for the latest energy proposals is to protect EU markets from the expansion of gas suppliers, above all Russia's Gazprom.
But this is strange as, according to latest forecasts, Europe may require up to 640 billion cubic meters of natural gas by 2020, and its dependence on gas imports keeps growing.
Estimating the concluded agreements, German energy concern E.ON Ruhrgas has calculated that by that time Europe will be short of approximately 140 billion cubic meters of gas.
The Russian Industry and Energy Ministry reported that Gazprom's natural gas export to non-CIS countries, which basically means the EU, went down 14% in the period January through August 2007, compared to the first eight months last year.
This could be a result of a warm winter and the consequent decline in energy demand. Or it could be the gas monopoly's attempt to determine what is more important for Europe - gas prices or stable supplies.
Judging by the European Commission's new proposals, it is worried over some other, more political issue.
Alexander Rahr, program director for Russian and CIS affairs at the German Council on Foreign Relations, said: "The European Union is trying to formulate new rules of the game for decades ahead, because it now has the power to do so. But its influence will plummet every year, and eventually it will have to take into account the interests of such producers as Russia, Kazakhstan, Turkmenistan, Iraq, Qatar and Algeria. They will demand, logically, that the EU open up its markets and behave not as it wants, but as producers want. It is a battle that is only beginning, but we can already hear the first rumbles."
Even if the EU wins this battle, it still risks losing the war. Judging by what Russian officials say, the Kremlin has grown tired of making endless concessions to the ever more demanding Brussels. Europeans risk going too far in their move to protect their markets from Gazprom's expansion and to stem the flow of Russian natural gas into Europe.
Igor Tomberg, Ph.D., is a senior research fellow with the Center for Energy Studies, the Institute of World Economy and International Relations at the Russian Academy of Sciences.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
