On Saturday, September 14, Gazprom cut supplies through the Opal gas pipeline due to a restriction imposed by the EU Court of Justice on the Polish government’s claim. We are talking about the land diversion of the Nord Stream-1 gas pipeline, which connects it with the gas transport system of Central and Western Europe. The operator is obliged to stop Gazprom’s use of 15.86 million kWh of capacity.
Recall that the European Commission in October 2016 allowed Gazprom access to 90% of Opal’s capacity – the Russian concern for seven years sought full access to these facilities.
The regulator’s decision provoked sharp criticism of the transit states of Russian gas – Ukraine and Poland. As a result, in December 2016, the Polish government filed a lawsuit with the Court of Justice of the EU with a demand to overturn the decision of the EC and suspend its action. A little later, a similar lawsuit was filed by the Polish state company PGNiG.
The arguments in the lawsuits are similar: Gazprom’s access to Opal allegedly bears unreasonable privileges to German consumers, and at the same time can reduce the transit of Russian gas through Poland, as Gazprom allegedly will transfer these volumes to Nord Stream. The 2018 lawsuit was dismissed by PGNiG. All the more unexpected was his current decision to side with Poland.
This time, the EU Court found that the European Commission had violated the principle of energy solidarity (appears in Article 194 of the Lisbon Treaty). The ECB has not carried out an impact assessment of how the increase in Gazprom’s Nord Stream supplies will affect Russian gas supplies to Poland, and they are carried out through Belarus and Ukraine.
The European Commission now has two months to appeal. And Gazprom was left without access to new opal transit auctions, and will not be able to use Opal’s capacity of 12.7 billion cubic meters at the german launch site in Greifswald.
According to experts, the problem is not even in a specific lawsuit. Although its challenge may stretch for years, during which the power of Nord Stream-1 will be limited.
The key problem is the position of the EU Court on the issue of “energy solidarity”, which jeopardizes Gazprom’s overall strategy of building bypass gas pipelines to stop transit through Ukraine.
It will now be extremely difficult for Gazprom to agree with the EC on the regime of use of Nord Stream-2, half of the capacity of which may be inaccessible to the Russian concern because of the amendments to the EU gas directive. It was extremely difficult since Poland would refer to the current court decision as a precedent and insist that Nord Stream 2 could also harm it.
In addition, the decision of the EU Court sharply strengthens Kyiv’s position in the upcoming transit negotiations.
Gazprom planned to conclude a short transit contract with Ukraine for one to three years, during which time to complete the construction of Nord Stream-2 and Turkish Stream – and leave the “undependable” with a nose. Ukraine, along with the EU, insists on the conclusion of a long transit contract – for a period of 10 years.
The next consultations between Russia, Ukraine and the EU on transit are scheduled for September 19. Symptomatically, The Executive Director of Naftogaz of Ukraine Yuri Vitrenko has already called the decision of the EU Court of Justice a “pleasant surprise”.
Meanwhile, the Bundestag has already expressed opinions that the decision of the EU court is purely political. The West wants to push Russia out of the gas market, said Robbie Schlund, a lawmaker from the Alternative for Germany party. According to him, “there is an intention, artificially reducing the volume of transit, to increase the price of Russian gas to make American liquefied gas (LNG) more competitive.”
And that’s a hell of a lot of truth, too.
“Gazprom will fight for its interests in any case – for Nord Stream-1 to be 100% full,” said Sergei Justiceov, director of the Institute of National Energy. “We must understand that there can be no other pipeline gas in Europe besides Russian gas. And under Russian law, only Gazprom has the right to supply blue fuel for export. If so, the parties will have to find a solution to the problem one way or another. This has happened before. Let me remind you that restrictions on the use of Opal as part of the EU’s third energy package were introduced in 2013. Under these rules, Gazprom could use only 50% of Opal’s capacity, and the remaining 50% – quotas for gas pumping – had to be sold to independent companies. However, a way out of the impasse was found: quotas were bought at auctions by Gazprom’s European energy partners, which allowed to load the pipeline in separate periods by more than 70%. bought gas right at the border, and transported it further along the Opal on its own. In this case, the gas will not be formally Russian.
Another question is how long it will take to resolve the problem. And until the problem is solved, the Ukrainian GTS will be loaded more.
So Kyiv won – did it manage to keep transit?
“Everyone understands that even if there were no decision of the EU Court, Gazprom would not be able to stop transiting through Ukraine at the end of the contract at the end of 2019. Simply because there is not enough workaround sway for this.
It turns out that the transit agreement had to be signed anyway. In any case, there would be a struggle for the provisions of the treaty. The main positions in it are the volume of transit, the duration of the contract, the transit tariff. In addition, another point of the contract is possible: direct gas supplies to Ukraine at a discount. If Kyiv goes for it, it will get an additional benefit for itself.
How important is it for Ukraine to sign a new transit contract for 10 years?
“It is important for Kyiv to delay the moment of the devastation of its “pipe” as much as possible. 10 years is the deadline on which the Ukrainian side can count. So she says: we want a contract for 10 years, with the volume of transit 60 billion. cubic meters of gas annually.
And Gazprom objects: no because there are problems. We have not settled the issue of the debt of $2.6 billion. as part of the Stockholm Arbitration Decision, we are awaiting a decision on the appeal. You say that you will allocate GTS to a separate company – the state-owned “Magistral Gas Pipelines of Ukraine.” Did you do something in that direction? No, Naftogaz did not take any practical actions on the transfer of GTS.
Therefore, Gazprom’s position is clear: let’s sign a contract for a year, and during this period we will solve all the controversial points. However, Kyiv is not satisfied with this option – and the parties will now “butt.”
Compromise, I believe, will still be found. Let’s say the transit contract is signed for 5 years, not 10 years. And not by $60 billion. cubes annually, and with a gradual decline in volume. In short, the bidding will be around every point of the contract, and every cent.
– A number of analysts believe that the EU, in this case, is acting as part of the overall strategy with the United States to oust Russia from the energy market. Gas, which Europe may not get from Russia, perhaps replace the supply of American LNG?
” First of all, the United States does not have such export volumes of LNG to completely force Russia out of the European market. Yes, the Europeans have built LNG terminals on their own, and these terminals are loaded on average by only 30%. It turns out that European companies are losing money.
But companies in the EU that buy Russian pipeline gas and companies that have invested in terminals are completely different. And it is impossible for a company that buys blue fuel from Gazprom under the agreement to force to buy more expensive LNG.
There is another circumstance: the price of LNG in Asia is traditionally higher than in Europe. And it is impossible to force the same American LNG suppliers to sell liquefied natural gas to Europe at lower prices.
And to give higher prices for LNG in Europe, and to interrupt Asian prices – why would the European consumer do that?!
It turns out that in theory, it looks beautiful: in Europe, there are LNG terminals, and there is a desire to fill them – it means that you can make assumptions about ousting Russia from the market. But in practice, someone has to pay for this ouster. And I’m not sure I’m willing to pay the European consumer. The first thing to pay attention to is that Europe has already built LNG infrastructure, and the Europeans have invested a lot of money in the terminals, not in the construction of Nord Stream-2,” says Andrei, President of the Union of Entrepreneurs and Tenants of Russia. Bunch. “Yes, so far these LNG terminals are only 20% used. Another thing is important: if they are fully loaded, Europe can at least now accept LNG in a volume comparable to that supplied by Russia.
In fact, the EU is insured against problems with Russian supplies. Plus, Washington may have started a game with Maidan in Ukraine just in order to put Europe under its energy control. So far, the Americans have not had time to increase the volume of shale gas production to the required level. But anyway, from the European side everything is done for the reception of LNG, and this speaks about the strategic choice of Europeans.
The calculation, I believe, is that the Russian direction will inevitably have difficulties with supplies. On the other hand, LNG production will develop, not only in the United States but also in other regions. As a result, it will be possible to replace significant volumes of Russian gas.