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• Transit Protocol
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Background to the Negotiations

The Energy Charter Treaty's existing Transit provisions oblige Signatory states, in accordance with the GATT/WTO principles of freedom of transit, to facilitate transit on a non-discriminatory basis.

However, following the Treaty's adoption in 1994, a consensus emerged within the Treaty's governing body, the Energy Charter Conference, that these provisions on energy transit issues could be amplified and strengthened in order to mitigate some specific operational risks that continued to affect energy transit flows.

In December 1999, the Charter Conference mandated the start of negotiations on an Energy Charter Transit Protocol. Negotiations on the text of the Transit Protocol began in early 2000.

Agreement was reached on the bulk of the Protocol’s text at the end of 2002.  There remained only a few outstanding issues to be resolved before the Protocol could be finalised, and these have been the subject of continued discussion since then between the European Union and Russia. A text was tabled for adoption at the meeting of the Energy Charter Conference on 10 December 2003 (this draft text is available below).

However, it became clear at this meeting that a unanimous decision could not be achieved on the basis of the compromise text; a complicating factor was that energy issues, including transit, were also a subject on the bilateral agenda for the European Union and Russia in the context of Russian negotiations for accession to the World Trade Organisation. The Protocol negotiations were temporarily suspended.

This suspension was lifted at the June 2004 meeting of the Energy Charter Conference, after Russia and the EU reached agreement on the terms of Russian WTO accession; further bilateral consultations between the EU and Russia have been taking place since the autumn of 2004.

On 7 July 2006, the then Chairman of the Energy Charter Conference, Henning Christophersen, made the following statement about the state-of-play in these consultations:

"Experts from Russia and the European Union have held an intensive series of exploratory talks in the first half of 2006 on issues that remain open between them in the draft text for an Energy Charter Protocol on Transit. Clarifications and text proposals that have so far been developed during these discussions are now being considered by both sides. These cover transparent and non-discriminatory ways to manage congestion in networks and grids, and provisions on cost-reflective tariffs.

The main issue requiring further consideration is how, and to what extent, the Protocol can include mechanisms to help establish long term transit arrangements where appropriate – in particular in connection with long-term supply contracts. This is an important issue for secure energy supply, and one that requires a satisfactory and balanced solution for the benefit of consumers, producers and transit countries.

The existing provisions of the Energy Charter Treaty already provide a unique multilateral framework for mitigating risks associated with energy transit. This framework would be strengthened by the more detailed rules of the Transit Protocol, providing additional assurance for the reliable transportation of energy across the Energy Charter constituency.

The Energy Charter is the best forum to develop such a Protocol, because of the legal foundation provided by the Treaty and its broad geographical coverage. I encourage the EU and the Russian Federation to continue their work towards finalisation of the draft Protocol, with the aim to put forward a complete draft text to all the Energy Charter member states as soon as practicable."
 

Current situation

The Energy Charter Conference, at its meeting in Istanbul on 7 December 2007, recalled the importance of transparent, non-discriminatory and operational legal frameworks for energy transit, for the benefit of consumers, producers and transit countries. The Conference reaffirmed its support for the finalisation of negotiations and adoption of the Energy Charter Protocol on Transit in order to expand the existing provisions of the Treaty. In this context, the Conference resolved to ask the Energy Charter Group on Trade and Transit to hold multilateral consultations on the draft Transit Protocol during 2008, with a report back to the Conference on the outcome of these consultations at the end of 2008.
 

Draft Text

In the interests of transparency, the draft text of the Transit Protocol, as submitted to the Energy Charter Conference in December 2003, has been made publicly available.