ANNUAL REPORT 2006
EFMA’s message which combines the external supply and internal market problem factors can be readily summed up: there has to be a level playing field for gas supply across the pan-European economic zone. This theme was fully promoted by a special EFMA publication entitled The European Fertilizer Industry’s Vision of a World Competitive European Gas Market.
The publication’s strategic messages are the following: As the largest single sectoral user of natural gas in the EU’s manufacturing sector, the European fertilizer industry applauds the EU institutions’ top priority commitment to establish truly competitive EU energy and gas markets. To achieve this, the vision and practice required must be aimed at a fully integrated pan-European, and even intercontinental, transparent, free and fair marketplace. The full weight of the EU’s legal trade and competition powers as well as the EU’s considerable economic consumer leverage must be fully engaged against unfair and illegal pricing practices. Energy-intensive industries in Europe – especially those such as the nitrogen fertilizer industry which use hydrocarbons such as gas as a raw material – must have fair and free market economy conditions prevailing in the EU internal market and the world market.
These strategic messages also formed the basis for EFMA’s formal positions vis-à-vis the Commission’s Green Paper on a European Strategy for Sustainable, Competitive and Secure Energy (September 2006) and DG Competition’s Gas Sector Inquiry (May 2006). Furthermore, against a background of regular dialogue with the EU institutions, EFMA’s President and other senior executives from the industry met with Energy Commissioner Piebalgs to put the EFMA position firmly on the Commission’s agenda. In the discussions there was mutual understanding on key reforming requirements, i.e. more pipeline, LNG and storage infrastructure to the EU; better inter-connectivity; more transparency on the markets; and a correction of dual-pricing. Dual-pricing, arguably, remains the most difficult issue to resolve. The EU is still relying on anti-dumping measures to correct the unfair effects of dual-pricing on the EU market. However, not only the unfair effects should be corrected – a more global and fairer solution must be found by comprehensive market economy practices and pricing in the producer/supplier countries, preferably confirmed in the WTO.
With energy and gas still very much a Member State competence, and for some even still an issue of “national sovereignty”, EFMA’s National Associations were briefed on this issue at the National Associations meeting in Madrid in June 2006. Indeed while the Commission is expected to present legislative proposals over the forthcoming year, decisions taken in the Member States regarding infrastructure, interconnectivity, and coordination amongst bordering national regulators that could bring the fastest results in terms of lower gas prices. By the same token, although it is the Council of Ministers that must ultimately approve any Commission proposal such as a third Gas Directive, such a Directive must be applied by each Member State and must take the national situation into account. Thus the Member State factor is supremely important.
An international level playing field – not only an EU level playing field – for gas and energy must be an imperative. If the international competition field cannot be levelled then EU trade policy must accordingly take strong and steadfast corrective actions at its borders. No solution at the source of the problems must mean solutions at the EU borders.
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