Gazprom will have to let other suppliers into the Opal gas pipeline

Gazprom will have to let other suppliers into the Opal gas pipeline

Poland successfully challenged the 2016 European Commission decision in the EU Court, thanks to which Gazprom could use most of the capacities of the Opal branch pipeline in Germany. It is reported by Bloomberg.

Opal receives gas from Nord Stream in the Baltic Sea and is a key link in the plans of the Russian company to refuse transit through the territory of Ukraine.

In 2016, the EU decided to hold auctions for the unused capacity of the Opal gas pipeline, which would allow Gazprom to retain half of its capacity and use some additional volumes on market conditions.

However, on Tuesday, the European Court of Justice in Luxembourg reversed the decision in 2016, believing that it “violates the principle of energy solidarity”. By court decision, the Russian company will have to allow other suppliers to use Opal’s facilities in accordance with “strict EU market rules” to ensure equitable open access and combat economic discrimination. The court decision may be appealed.

Russia provides more than a third of the European demand for natural gas, with most of it coming through Ukrainian pipelines built back in Soviet times. Russia believes that they will no longer be needed in the future, partly thanks to the Nord Stream pipeline. Currently, Ukraine, the Russian Federation and the EU are negotiating to replace the current transit agreement, which expires at the end of the year.

The removal of Opal’s capacities, with a throughput of 36 billion cubic meters of gas per year, from Gazprom’s control will force it to use alternative routes, in this case through Ukraine. According to Petr Wozniak, executive director of the Polish oil and gas company PGNiG, the decision of the EU court will reduce the transportation of Russian gas through Nord Stream by 12.4 billion cubic meters per year, which Gazprom will need to deliver to Europe in another way.

“This decision will strengthen Ukraine’s position in negotiations with Russia,” said PGNiG Executive Director.

According to experts, the decision of the EU court to cancel Gazprom’s expanded access to the Opal gas pipeline will have serious consequences. In particular, it will now be difficult for Gazprom to agree with the European Commission on the full utilization of Nord Stream-2, while half of the gas pipeline’s capacity may not be available to Gazprom due to amendments to the EU gas directive.

According to these amendments, half of the Nord Stream-2 capacities should be reserved for other independent gas suppliers. Earlier, Russian gas market experts noted that Gazprom could use Turkmen gas as gas from independent suppliers in such a situation.