Agreeing on the concept of the common market of oil

It is supposed that the MSs first will create a single electricity market, and then a common market of oil and oil products
Agreeing on the concept of the common market of oil
03 June 14:27 2016 Print This Article

The Treaty establishing the Eurasian Economic Union (EEU) provides for the creation of the single market of energy products. In its turn the Eurasian Economic Commission (EEC) proposed the concepts for its formation, in particular for a single market of electricity, oil and oil products, and gas market.

On May 31, the Supreme Eurasian Economic Council at the level of the Heads of States has agreed on the concept of the formation of the common markets of oil and oil products and gas market. This document provides for the development the working programme for the creation of the common markets and for subsequent decisions to be taken in this domain, such as, for instance, the formation of a commodities exchange markets of the Member States and a common stock market, the development of an appropriate legal framework for the functioning of markets, harmonization of national standards, etc. Therefore, companies operating in the MSs will have equal access to the oil infrastructures and will be able to purchase oil and oil products free of duty charges and on the market price. The main idea of the ‘market-making’ is the liberalization of the market and opening it to everyone who operates within the territory of the EEU.

According to Danil Ibraev, the member of the board of the EEC (Minister) for Energy and Infrastructure, until 2018, a working programme for oil and oil products will be developed and approved, while until 2023 it is supposed to be implemented. That will anticipate the preparations of an appropriate international agreement and its subsequent ratification in each state. From this on, a common market will be launched meaning that mutul trade of oil products is not anymore exercised via bilateral agreements of the governments, but via contracts of private parties.

What concerns a single market for electricity, which is expected to be launched by first, a draft programme has been already approved by the Advisory Committee of the EEC on May 23, 2016. It worth to mention that the concept of a common energy market were approved by the Supreme Eurasian Economic Council on May 8, 2015, which states that before the end of June 2016, the programme is supposed be adopted. Then, the MSs will have to implement it before preparing a relevant international agreement and ratifying it until the end of 2019.

The idea of ​​a single electricity market in many ways repeats the idea of common markets of oil and oil products. First, it is designed for market liberalization, thus increasing price transparency and boosting growth and competition. It also provides for equal access to national markets and relevant infrastructure.

Earlier this week, Kyrgyzstan (MS of the EEU), Tajikistan (a probable future member of the EEU), Pakistan, and Afghanistan have decided to continue development of the CASA-1000 project which is providing for the creation of an energy bridge, a single electricity market. Until the end of 2020, it will connect the country’s hydropower plants. The total project cost is USD 1 bln dollars allowing Tajikistan and Kyrgyzstan to export electricity power to South Asia with annual capacity of 1,300 MW per year.

CASA-1000 project is supported not only by international financial institutions (such as the World Bank, Islamic Development Bank, United States Agency for International Development (USAID), and others), but also by the US State Department and the Department for International Cooperation of Great Britain.(A.K.)

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