Energy - and hydrocarbons in particular - is transported over increasingly large distances from producers to consumers. In the case of natural gas, most of which is transported by pipeline, this often involves crossing different national borders. Bilateral disputes over energy transit can quickly have multilateral implications for gas supply, underlining the importance of standards, accepted by countries on a multilateral basis, to promote reliability of cross-border energy flows.
A distinctive feature of the Energy Charter Treaty is that it provides a set of rules that covers the entire energy chain, including not only investments in production and generation but also the terms under which energy can be traded and transported across various national jurisdictions to international markets.
The Treaty's energy-specific provisions on trade and transit are based on those of the WTO, but with two important additional considerations. Firstly, they extend WTO rules for the energy sector even to those Contracting Parties that are not yet members of the WTO; as of March 2013, this was relevant for six member countries of the Energy Charter Treaty that are not yet members of the WTO.
Secondly, the Treaty addresses in more detail the important strategic issue of energy transit. Current Treaty provisions oblige participating states to take the necessary measures to facilitate transit of energy, consistent with the principle of freedom of transit, and to secure established energy flows. Transit countries are also under an obligation not to interrupt or reduce existing transit flows, even if they have disputes with another country concerning this transit.
Through its investment and transit provisions, the Treaty also supports the establishment of new transportation capacity and thereby facilitates the diversification of supply and of export. The substantive provisions of the Treaty in these areas are enforceable through a state-to-state dispute settlement mechanism; this can be particularly valuable for complex cross-border infrastructure projects, like the Baku-Tblisi-Ceyhan and Baku-Tblisi-Erzurum Gas pipelines, that require the consent and agreement of multiple governments.
The Energy Charter's Trade and Transit Group reports to the Energy Charter Conference and is responsible for discussion of all issues related to cross-border energy flows that are covered by the Treaty. Its main tasks are:
The Energy Charter Conference appointed Ms. Berris Ekinci of Turkey to the position of Chairman of the Trade and Transit Group since January 2013. Ms. Ekinci is Acting Deputy Director General for Energy, Water and Environment at the Ministry of Foreign Affairs of Turkey. Mr. Masahiko Fujihara, Counsellor at the Japanese Mission to the European Union, is Vice-Chairman of the Group.