It is well known that the Lisbon Treaty has transformed the legal framework for EU energy policy. Under the terms of the Lisbon Treaty, the basic control of national energy policy is actively being transferred from Member States to the EU. The Lisbon Treaty is already having a huge impact on the ability for Britain to determine its own competitive energy policy.

Last February, the EU leaders concluded that “There is a need for better coordination of EU and Member States' activities with a view to ensuring consistency and coherence in the EU’s external relations with key producer, transit, and consumer countries.” According to the European Council Conclusions from 4 February 2011 “The Member States are invited to inform from 1 January 2012 the Commission on all their new and existing bilateral energy agreements with third countries; the Commission will make this information available to all other Member states in an appropriate form, having regard to the need for protection of commercially sensitive information.” On 7 September, the Commission proposed a draft decision setting up an information exchange mechanism with regard to intergovernmental agreements between Member States and third countries in the field of energy.

Under Article 13 (6) of Regulation (EU) No 994/2010 concerning measures to safeguard security of gas supply, Member States are obliged to notify the Commission of all intergovernmental gas supply agreements with third countries dealing with security of gas supply. But, presently, there is no general obligation to inform the Commission about intergovernmental agreements in the field of energy between Member States and third countries. The aim of the present proposal is to extend and complement the notification procedure which is already applicable to gas agreements to all forms of energy and to transform the last February European Council Conclusions into an information exchange mechanism. However, one could say that the Commission proposal is not in line with the summit conclusions. The exchange of information between the Commission and all Member States on all intergovernmental agreements in the field of energy with third countries would not be voluntary but mandatory. According to the Commission “A legal instrument for mandatory exchange of information is therefore the only option that will guarantee that the stated policy objectives are met, most appropriately in the form of a Decision.”

The Commission has made very clear that it wants the EU “to speak with a common voice when it comes to external energy relations.” As part of its efforts to create a common external energy policy for the EU, the European Commission wants member states to share information about energy agreements that they make with non-EU countries. The Commission pointed out that bilateral energy relations between individual Member States and supplier or transit third countries could result in a fragmentation of the internal market. In fact, the Commission noted that “is not always in the commercial interest of third country energy suppliers” to comply with EU legislation, and that “Member States are under increasing pressure to accept regulatory concessions in their intergovernmental agreements with third countries which are incompatible with Union energy law.” Unsurprisingly, the Commission has stressed that intergovernmental agreements with unlawful provisions infringing internal market rules, “shall therefore not be signed by the Member States.”

The draft decision covers “all existing, provisionally applied and new intergovernmental agreements which are likely to have an impact on the operation or the functioning of the internal market for energy or on the security of energy supply in the Union as these two issues are intrinsically linked.” Hence, if such proposal is adopted, the UK as well as the other member states would be required to send all existing and provisionally applied energy agreements with third countries to the Commission three months after the entry into force of the draft decision.

Moreover, under the draft decision, member states shall inform the Commission, as early as possible, of their intention to open negotiations with a third country on future intergovernmental agreements in the field of energy or to amend existing ones. Member states would be required to provide the Commission with all “the relevant documentation, an indication of the provisions to be addressed in the negotiations, the objectives of the negotiations” as well as “other relevant information.” Member States would also be required to regularly inform the Commission on the ongoing negotiations. By proposing such requirement, the Commission has in mind to influence future intergovernmental agreements towards conformity with the Union energy legislation and the Union policy on security of supply. In fact, the Commission is seeking to be granted the right to participate as an observer in the negotiations. Under the proposal, on request of the Commission or the Member State concerned, the Commission shall participate as an observer to the negotiations. This is unacceptable, the European Commission cannot be allowed to interfere in such negotiations.

Under the draft proposal, once an intergovernmental agreement is ratified, member states shall send the ratified text to the Commission, including their annexes, as well as all amendments thereto.

The Commission would make all information received available to all the Member States in electronic form. A Member State may indicate to the Commission whether any part of the information in the agreements provided, particularly commercial information, is to be regarded as confidential. The Commission would be required to respect these requests. However, under the draft proposal “Requests for confidentiality should however not restrict access of the Commission itself to confidential information as the Commission needs to have comprehensive information for its own assessment.” Therefore, the Commission would have access to confidential information. Consequently, it is far from clear how sensitive information would be protected. Consequently, the draft proposal raises concerns about Member States’ business confidentiality.

The Commission has also proposed a mandatory ex-ante control mechanism applicable to all intergovernmental agreements in the energy field. Under the draft proposal, the Commission on its own initiative or on request from the Member State which is negotiating an intergovernmental agreement, have the right to assess the compatibility of the negotiated agreement with Union law before the agreement is signed, in order to ensure the agreement is lawful and follows the Union’s common energy policy objectives. The Member State concerned shall, therefore, refrain from signing the agreement for a period of four months following the submission of the draft intergovernmental agreement to the Commission. If no opinion is provided within the examination period, four months, the Commission shall be deemed not to have raised objections. Obviously, this is likely to put a burden on Member States and delay the conclusion of all future intergovernmental agreements.

If there is a request from the Commission, a member state negotiating energy agreements with third countries would have to submit them to the Commission for approval. This would give the Commission extensive powers to assess energy agreements being negotiated by member states and third countries. The Commission would be entitled to review all energy deals that member states reach with third countries in order to ensure they are in line with EU law and policy. In fact, the Commission proposal would have as effect preventing member states to negotiate their own international energy deals.

The Commission proposal is based on Article 194 TFEU whereby the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, with the Council acting by a QMV, shall adopt measures necessary to achieve the objectives of the EU energy policy. Energy is an issue of vital national interest and the UK will not be allowed to veto damaging EU laws in this area. Solely measures “significantly affecting a member state’s choice between different energy sources and the general structure of its energy supply” are to be adopted by unanimity in accordance with a special legislative procedure.

The draft decision is a priority for Poland, which holds the rotating presidency of the EU's Council of Ministers, and it is aiming for a formal agreement at the energy Council in November. The UK cannot support such proposal, which would give to the Commission an extensive control over its energy deals. The European Commission would have vetting powers over UK´s energy deals with third countries. It is therefore essential for the UK to seek to form a blocking minority. Giles Chichester MEP, Conservative spokesman on energy in the European Parliament, described the proposal as "the worst kind of meddling." He said, “Our energy arrangements are member states' own business, not the commission's. This is an attempt to control and interfere with our individual trading interests on a new and deeply worrying scale.” In fact, Giles Chichester noted that “The Oettinger scheme could also restrict British exports as a tenth of domestic oil production is currently exported outside the EU."