OGZPY PJSC Gazprom (PK)

BRUSSELS—The European Parliament and European Union member states agreed on Wednesday on new proposals giving the bloc's executive arm the power to scrutinize natural gas and oil deals in advance, a move to help the EU secure and diversify energy supplies.

The proposals were launched in February by the European Commission and would allow it to ensure oil and gas deals between EU member states and outside governments conform to EU rules, including those aimed at preventing big gas producers, such as Russia's PAO Gazprom and other energy giants, from owning the distribution networks in the EU.

The proposals still must be formally approved and come as the bloc is seeking to curtail its dependence on Russian energy supplies following the conflict in Ukraine.

The agreement only applies to contracts signed between EU governments and third countries, not deals struck by private companies.

A key point of contention has been whether to allow the Commission to scrutinize only gas contracts or also other energy deals. In the end, member states bent to pressure from EU lawmakers to allow oil contracts also to be submitted for a pre-check in Brussels.

Under the proposed agreement, EU governments would notify the EU of their draft intergovernmental oil and gas deals and couldn't sign the deals until the Commission has rendered its opinion.

Member states would be committed to taking into account the Commission's opinion, although the EU executive would have no direct veto powers. Agreements related to electricity wouldn't be prescreened in Brussels, though the contracts would have to be shown to the Commission once they are signed.

Russia provides about one-third of the EU's total natural gas needs and has a monopoly in some countries. The conflict in Ukraine, the resulting economic sanctions on Russia and EU antitrust charges against Gazprom have intensified that effort, although not without some resistance in some countries.

European Commissioner for Energy Union Maros Sefcovic on Wednesday said renegotiating energy contracts between governments once they are concluded has proven very cumbersome.

"Today's agreement ensures that rather than assessing whether international agreements comply with EU law after they are signed, member states will now do so in advance. This is a big political and legislative achievement," he said.

-Gabriele Steinhauser contributed to this article

(END) Dow Jones Newswires

December 07, 2016 13:35 ET (18:35 GMT)

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