EU countries thrash out compromise on liberalising energy sector

(LUXEMBOURG) - EU nations on Friday agreed on rules for liberalising their energy markets, securing the deal by including measures to prevent sector giants from taking too much control.

The deal ends a year of fierce wrangling which ensued after the European Commission proposed laws to increase competition in the energy sector.

Under the text, adopted by EU energy ministers in Luxembourg, Latvia, the Netherlands, Portugal and Spain succeeded in introducing measures to protect their own gas and electricity networks from larger predators such as France's EDF and GDF or Germany's EON and RWE.

In the original scheme, aimed at liberalising the sector and easing the stranglehold of the energy majors, electricity and gas companies would have been forced to split the ownership of their supplies from their pipelines and grids, helping new enterprises to enter the market and forcing prices down.

Under the deal hammered out Friday, energy producers will not be allowed to buy up energy-transmission companies in European countries where full "unbundling", or splitting up, of the sector has been introduced.

The compromise deal, if adopted, would for example prevent EDF from buying high-tension electricity lines in Spain or the Netherlands.

After the agreement by the EU energy ministers the amended proposals must be given the full green light by the European parliament before they can come into effect, as planned, in the first half of next year.

European Commission President Jose Manuel Barroso hailed the agreement, saying it would "enable many of the benefits of an open and competitive energy market including fair prices for citizens and industry; business opportunities for new or smaller companies."

A reciprocity rule is also included to deal with the likes of Russian energy giant Gazprom, which would be subject to the same rules.

The Baltic states in particular are concerned about seeing their energy markets taken over by Gazprom.