BASF SE At an informal debate among EU energy ministers, Germany's partners in the 28-nation bloc spoke out against Russia's Nord Stream 2 pipeline plan to pump more gas directly from Russia's Baltic coast to Germany.
EU nations are expected to vote in the autumn on the European Commission's request for a mandate to negotiate with Russia on behalf of the bloc as a whole.
Germany, the main beneficiary of the pipeline, sees it as a purely commercial project, with Chancellor Angela Merkel last week saying she saw no role for the Commission.
The plan taps into divisions among the bloc over doing business with Russia, which covers a third of the EU's gas needs, despite sanctions against Moscow over its military intervention in Ukraine.
In private, EU officials say they hope direct talks with Moscow would delay the project past 2019, depriving Russian state gas exporter Gazprom (>> Gazprom PAO) of leverage in talks over transit fees for Ukraine, the current route for most gas supplies to Europe.
Germany, Austria and France - which have firms partnering with Gazprom on the project - declined to take the floor on Monday, EU diplomats said.
"We had 13 delegations intervening, with all of them being supportive of the Commission's approach," Commission Vice President Maros Sefcovic told Reuters by telephone after presenting the EU executive's case to member states.
"I am definitely optimistic about getting the mandate, but I know this is just the beginning of the debate."
The Commission found support from Italy as well as Nordic, Eastern European and Baltic states, EU sources told Reuters.
"Germany has commercial interests, but it needs to explain itself," one senior EU official said.
With the pipeline expected to reroute some Russian gas supplies around Ukraine to the north, Italy voiced concerns it would increase gas prices for customers further down the line.
Eastern European and Baltic states fear it will increase their dependence on Gazprom and undercut Ukraine.
Nordic nations, meanwhile, have security concerns over the pipeline being laid near their shores under the Baltic Sea, where Russia has bolstered its military presence.
Demark, which is considering amending its laws to allow it to ban pipeline projects such as Nord Stream 2, welcomed the bid by EU regulators to make the pipeline subject to EU energy rules that prevent energy suppliers from dominating infrastructure.
"I am very happy with the decision today that it now shall be examined," Danish Energy Minister Lars Lilleholt told Reuters.
'TOXIC ISSUE'
However, many EU nations have yet to take a stand.
"It is quite toxic. Many member states are quite wary of advertising their position," one diplomat told Reuters.
There are also differences among EU member states over what aims to pursue in potential talks with Russia.
Poland, one of Nord Stream's most vocal opponents, called on EU nations to reach a common stance and to suspend granting permits for the project while the bloc deliberates. "It's even more important given that Russia is still subject to EU sanctions," Poland's Deputy Energy Minister Michal Kurtyka said.
Speaking in Paris on Monday, Ukraine's foreign minister told Reuters the draft EU proposal did not go far enough to secure guarantees from Russia, warning Nord Stream 2 would have "dangerous consequences" for the bloc.
Adding to tensions is the threat of new U.S. sanctions on Russia that would penalise Western firms involved in Nord Stream 2: Uniper (>> E.ON), Wintershall (>> BASF), Shell
Several EU diplomats said the measures proposed by the U.S. Senate have already backfired against their stated aim of bolstering European energy security.
"It's a divisive measure," one senior official said. "It's easy for the U.S. to go after Russian gas of course, they don't use it. ... We are trying to make the best of a bad thing by balancing the interest of different member states."
(Reporting by Alissa de Carbonnel; Additional reporting by Erik Matzen in Copenhagen; Editing by Dale Hudson and Susan Thomas)
By Alissa de Carbonnel
