Brussels unlikely to appeal EU court decision hampering Nord Stream pipelines

Maroš Šefčovič speaks to the Brussels press on 11 September 2019. [Europe by Satellite]

The European Commission is unlikely to appeal a decision of the EU General Court on Tuesday (10 September) to restrict the transit of Russian gas via the Opal pipeline, running on German territory.

This decision appears to hampers the Gazprom-backed Nord Stream 2 offshore pipeline project, which is nearing completion, as well as the first leg of the project which is operational since 2011.

The EU court annulled a Commission decision from 2016 to exempt the Opal pipeline from EU rules, aimed at preventing dominance of the supply infrastructure.

The Opal pipeline, which already carries gas from Nord Stream, runs parallel to the German-Polish border all the way to the Czech Republic, over 480 km. Nord Stream is carrying 36.5 billion cubic meters of Russian gas a year (bcm/y). The plans are that Nord Stream 2 would also tap in Opal.

But following the court decision, Opal will be constrained to take only 12.5 bcm/y. The court decision has immediate effect.

Germany is the main beneficiary of Nord Stream and Nord Stream 2. The legal challenge was brought up by Poland, the most vocal opponent of the project.

Maroš Šefčovič, the Commission Vice President for the Energy Union, was asked on Wednesday to comment the court decision. Although he did say it explicitly, it became clear that the EU executive has no intention to appeal the court decision.

‘Energy solidarity’

Šefčovič said the decision was still very fresh, that his services were still studying it, and that it underlined how important the principle of energy solidarity is for Europe.

The ECJ ruled that the 2016 decision is “in breach of the principle of energy solidarity” because it failed to properly assess how to balance Germany’s interests against the negative impacts on other EU member states.

The Commission’s relations with the Nord Stream 2 project are complicated. Western European investors Engie, OMV, Shell, Uniper and Wintershall are also part of the project. Some EU countries support it, others strongly oppose it.

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In particular, Poland claims Nord Stream 2 will deprive Ukraine from its role of gas transit country, and the lucrative fees that come with it. Countries from Central Europe, including Poland, would be similarly affected.

“The court has agreed with our arguments,” Polish Energy Minister Krzysztof Tchorzewski said.

The deputy head of PGNiG said the ECJ’s decision would prevent Gazprom from completely halting transit via Ukraine.

“Ukraine’s negotiating position will improve significantly,” PGNiG Chief Executive Piotr Wozniak said, quoted by Reuters.

He said gas volumes being sent through Ukraine would increase by at least 12.5 bcm/y, and flows through Nord Stream and Opal should soon fall by a similar amount.

A spokesperson of Nord Stream 2 told EURACTIV the company was not part of the court case and saw no impact from the court decision on the implementation of this project.

Trilateral talks

The EU is preparing to host trilateral talks with Russia and Ukraine on 19 September. Asked if the development was favourable for the Commission, Šefčovič avoided a direct answer, but insisted in the need of long-term contracts with Gazprom.

The EU is mediating between Russia and Ukraine on gas supply and transit issues since 2014.

The Commission Vice President reminded that the EU side had been discussing the date for the next round of trilateral talks since May. He explained that the EU executive had been waiting for the new Ukrainian administration to be in place, following the presidential elections held in March-April.

He explained that the Ukrainian side was willing to apply European law, saying this would bring clarity, transparency and efficiency. The letters sent by the Commission to both parties also stressed the importance of long-term contracts, he said.

The Commission wants a “European way” of setting transit fees, Šefčovič added.

The present long-term contract between Russia and Ukraine expires at the end of the year, putting pressure on negotiators to achieve a lasting solution.

According to Šefčovič, both countries have an interest in achieving a solution. This would preserve the image of Russia as a reliable supplier, and the image of Ukraine as a reliable transit country, he said.

“Securing the long-term transit trough Ukraine is of strategic importance for the energy security of the European Union,” Šefčovič said.

[Edited by Frédéric Simon]

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