April 21, 2009

Conceptual Approach to the New Legal Framework for Energy Cooperation (Goals and Principles)

1. A more sustainable longterm development model of the future requires a modern global energy supply system which would be adequate to the current conditions.

2. The existing bilateral arrangements and multilateral legally binding norms governing international energy relations have failed to prevent and resolve conflict situations, which makes it necessary to efficiently improve the legal framework of the world trade in energy resources.

3. It would be advisable to elaborate a new universal international legally binding instrument, which, unlike the existing Energy Charter-based system, would include all major energy-producing (exporting) countries, countries of transit, and energy consumers (importers) as its Parties and cover all aspects of global energy cooperation.

4. A new system of energy instruments should be:

– Universal (applicable to the relations between any countries),

– Open (for accession by third countries),

– Comprehensive (to cover all aspects of energy cooperation),

– Equal and non-discriminating (without imbalances favoring certain categories of actors),

– Consistent with relevant obligations under other international instruments,

– Efficient (should include an efficient common implementation mechanism).

Main Principles of the New Legal Framework for Global Energy Cooperation

In energy relations, it is necessary to be guided by the experience in implementation of the Energy Charter documents and approaches stipulated in the G8 Declaration and Plan of Action on Global Energy Security approved by the St.Petersburg Summit in 2006.

The Parties should cooperate in the sphere of energy on the basis of the following principles:

– Recognition of indivisibility of sustainable global energy security and interdependence of all world energy exchange participants;

– Mutual responsibility of energy consuming and supplying countries, as well as of transit states for global energy security;

Recognition of security of supply (delivery) and demand (transparent and predictable marketing) as key aspects of global energy security;

Unconditional state sovereignty over national energy resources;

– Non-discriminatory access to international energy markets, their opening and increased competition on them;

– Coverage of all types of energy and utilities and their related materials and equipment;

– Transparency of all international energy market segments (production/export, transit, consumption/import);

– Non-discriminatory investment promotion and protection, including new investments into all energy chain links;

– Promotion of mutual exchange of energy business assets within investment activities;

– Non-discriminatory access to energy technologies and participation in technology transfers;

– Smooth energy supply to international markets, including through transit systems;

– Technological reliability of all energy infrastructure elements, including transit ones;

– Physical security of essential energy infrastructure;

– Promotion of infrastructure projects having great importance for global and regional energy security;

– Mandatory consultations on and coordination of energy policies and related measures, including in the sphere of establishing a future energy balance structure, energy supply diversification, regulatory documents on energy production, trade, transit and consumption, planning and implementation of infrastructure projects which impact on global and regional energy security;

– Creation and improvement of early warning mechanisms which involve supplying, consuming and transit states;

– Enhanced efficiency of energy production, processing, transportation and use through national and international initiatives;

– Promotion of broadbased scientific and technological cooperation in the sphere of energy, including alternative and renewable energy sources, improved energy efficiency and saving through all energy chain links;

– Cooperative efforts towards environmental protection, prevention of new negative consequences of climate change and management of the current ones;

– Terminological and notional uniformity of regimes created by new documents (including in the sphere of transit– see Annex1).

Annex 1: Elements of the Transit Agreement

The new system of documents should include as its integral part a new Agreement on the guarantees of transit of energy materials and products (listed in Annex2) intrinsically incorporating a Treaty that establishes procedures to overcome emergency situations in this field.

The goal of the Agreement is to ensure a reliable and uninterrupted transit.

The Agreement shall determine:

– Main terms, the uniform use of which in transit Treaties would ensure universal application of relevant legal norms;

– Principles of establishing transit tariffs (objectivity, reasonableness, transparency, non-discrimination, cost justification, adequate tax regime);

– Obligations of the Parties to the Agreement to ensure the fulfillment of transit requirements by their entities;

– Unacceptability of interruption or reduction of transit that is unprovided for in transit Treaties, or intervention in transit flows;

– Responsibility of Parties for losses incurred as a result of the nonfulfillment of requirements under the Agreement or transit Treaties;

– Mechanisms for coordination of actions of the Parties to optimize transit routs;

– System of bodies (commissions formed on the basis of representation of the Parties and reputable international organizations) authorized to regulate emergency situations and acting on the principles of equitable participation of the Parties;

– Mandatory response of the Parties to partners' requests and obligations to ensure access of Parties' experts and conflict regulation bodies to transit infrastructure;

– Preference of diplomatic over court channels to resolve conflicts with a possibility of dispute resolution in accordance with the UN Commission on International Trade Law (UNCITRAL) Arbitration Rules;

– Unacceptability of reservations to the Agreement.

Annex 2: List of Energy Materials and Products

Nuclear energy

Uranium or thorium ores and concentrates.

Uranium ores and concentrates.

Thorium ores and concentrates.

Radioactive chemical elements and radioactive isotopes (including the fissile or fertile chemical elements and isotopes) and their compounds; mixtures and residues containing these products.

Natural uranium and its compounds.

Uranium enriched in U235 and its compounds; plutonium and its compounds.

Uranium depleted in U235 and its compounds; thorium and its compounds.

Radioactive elements and isotopes and radioactive compounds.

Spent (irradiated) fuel elements (cartridges) of nuclear reactors.

Heavy water (deuterium oxide).

Coal, natural gas, petroleum and its products, electric energy

Coal, briquettes, ovoids and similar solid fuels manufactured from coal.

Lignite, whether or not agglomerated excluding jet.

Peat (including peat litter), whether or not agglomerated.

Coke and semi-coke of coal, of lignite or of peat, whether or not agglomerated; retort carbon.

Coal gas, water gas, producer gas and similar gases, other than petroleum gases and other gaseous hydrocarbons.

Tar distilled from coal, from lignite or from peat, and other mineral tars, whether or not dehydrated or partially distilled, including reconstituted tars.

Oils and other products of the distillation of high temperature coal tar; similar products in which the weight of the aromatic constituents exceeds that of the non-aromatic constituents (e.g., benzole, toluole, xylole, naphtalene, other aromatic hydrocarbon mixtures, phenols, creosote oils and others).

Pitch and pitch coke, obtained from coal tar or from other mineral tars.

Petroleum oils and oils obtained from bituminous minerals, crude.

Petroleum oils and oils obtained from bituminous minerals, other than crude.

Petroleum gases and other gaseous hydrocarbons

Liquefied:

– natural gas

– propane

– butanes

– ethylene, propylene, butylene and butadiene

– other

In gaseous state:

– natural gas

– other

Petroleum coke, petroleum bitumen and other residues of petroleum oils including of oils obtained from bituminous minerals.

Bitumen and asphalt, natural; bituminous or oil shale and tar sands; asphaltites and asphaltic rocks.

Bituminous mixtures based on natural asphalt, on natural bitumen, on petroleum bitumen, on mineral tar or on mineral tar pitch (e.g., bituminous mastics, cut-backs).

Electric energy

Other types of energy

Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms.

Charcoal (including charcoal from shells or nuts), whether or not agglomerated.

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