Naftogaz CEO: Certifying only the Nord Stream 2 last mile is ‘a mockery of EU rules’

The CEO of Naftogaz Yuriy Vitrenk [R]. MEP Viola von Cramon-Taubadel holds the mictophone. Prof. Dr. Friedbert Pflüger appears on the screen. [Georgi Gotev]

The Ukrainian position is that since Nord Stream 2 is not compliant with EU rules, it should not be certified, the CEO of Ukraine’s gas and oil state company Naftogaz Yuriy Vitrenko told a conference in Brussels on Wednesday (1 December) organised by EURACTIV Bulgaria.

The conference, titled “Nord Stream 2: no certification without compliance?”, came at a time when pressure is building in the US and in several EU countries to oppose the $11 billion pipeline, which has just been completed but still awaits certification by the German regulator and the EU Commission.

The pipeline Nord Stream 2 is designed to bring Russian gas to Germany under the Baltic Sea, bypassing Ukraine.

Vitrenko explained that at the heart of the matter was the full application of 3rd energy package for the whole length of the Nord Stream 2 pipeline, from the Russian shores to Germany, including non-discriminatory third-party access, as opposed to having it applied only for the last mile on German soil.

The Third energy package entered into force in September 2009. Dubbed “anti-Gazprom”, its core elements include ownership unbundling, which includes separating companies’ generation and sale operations from their transmission networks. Russia’s practice was to sell gas to Europe via its gas export monopolist Gazprom via pipelines it controls at 100%.

In Vitrenko’s words, “non-discriminatory third-party access” means that other producers of gas in Russia other than Gazprom should be able to use the pipeline. Exporters from Central Asia, such as Turkmenistan, Kazakhstan, and Uzbekistan, who want to export their gas on the European market, should also transit gas through Russia and decide on the route to Europe, including using the pipeline. He also argued that European clients should buy at the Russian border, meaning that Gazprom should not dictate where they would buy Russian gas.

He also argued that the non-discriminatory approach should apply to all pipelines, not only Nord Stream 2. This would put Germany in a privileged position compared to Slovakia, Poland, the Czech Republic or Italy.

Vitrenko recognised that the German regulator could not make a decision that would be unfavourable to other markets in the EU.

“What we are demanding is first, let’s make Nord Stream 2 compliant”, he said.

He reminded that the certification in Germany was suspended, allowing Gazprom to create a German subsidiary, which in his words would be responsible only for the short section of the pipeline on German soil.

“We are clearly against such an approach. Certifying just the last mile makes no sense, it’s a mockery of EU rules, and we hope it won’t happen”, the CEO of Naftogaz said.

He added that after the decision of the German regulator, the European Commission would play a decisive role.

“We would expect the European Commission to have a very strong position to apply the EU rules to the entire pipeline, and not just to this pipeline, but to all pipelines that connect Russia and the EU.”

“The Ukrainian position is that since NS2 is not compliant with EU rules, it should not be certified. If and when they will comply with EU rules, it will be a different story”, Vitrenko said.

Vitrenko also argued that should Russia continue to use gas as a weapon, the West should use further sanctions against Russia.

Weaponisation’ of gas

“Russia says it fulfils its contractual obligations, but this only concerns long-term contracts”, Vitrenko said. In his words, Russia decreased their supplies at the so-called spot markets three times, despite the surge in demand.

Another example he gave is gas differentiation- when Russia sells gas to different markets at different prices, and the logic is not commercial logic.

“For example, they want to help Serbian politicians ahead of some elections, so they sell gas at non-market discounts. Or they want to punish Moldova for its geopolitical choice and immediately demand high prices, repayments of debts from the past. And recently, because of Russian warships in the Black Sea, we cannot finish the seismic study for gas exploration in our waters, conducted by European firms’ ‘, Vitrenko said.

“If that is not weaponization, then what is it,” the Naftogaz CEO asked, insisting that the response to resist this weaponisation is “to insist with the EU on the full application of the rule of law in the certification process”.

Prof. Dr Friedbert Pflüger, a former CDU MP who teaches Energy and Climate Security at the University of Bonn, defended the pipeline. He argued that the project provided much-needed diversification of supplies, Russia had been a reliable supplier to the EU even during Cold War times, and gas was never used as a weapon. According to him, Russia is more dependent on selling gas to Europe than vice versa. “They can not blackmail us any more. We have diversified”, he said.

Where is the US LNG?

Prof Pflüger also made ironic remarks as to the present outflow of US LNG to the EU markets. Reportedly, due to the higher prices in Asia, the US has prioritised this market.

“Where is American energy? We do not see them right now. They are all gone to China and to India”, the professor said.

He further explained that in a worldwide situation where gas prices are increasing, it was important to have reliable partners, which is “the big difference” with the US approach.

In his view, the American sanctions make it difficult to apply the rule of law, and Ukraine encouraged the US Congress to take action against European companies.

US Republicans renew push to sanction Nord Stream 2 pipeline

A group of US Senate Republicans said on Monday (8 November) they had introduced legislation that would impose mandatory sanctions on Nord Stream 2, a Russian-backed natural gas pipeline that opponents believe would be harmful to US allies in Europe.

“We have done so much. And what we hear from your side is only complaints and attacks. This is not the right way to deal in Europe”, prof. Pflüger said. He thinks that a new tone is needed and another understanding of what the German government has done.

“The pipeline is there, and it will transport gas sooner or later. And it is a good idea to look for compromises and possibilities for cooperation”, he recommended.

MEP Viola von Cramon-Taubadel (Greens, Germany), known for her positions against the pipeline, refuted Pflüger’s arguments. In particular, she called his statements about diversification “very naïve”.

“We did not diversify but rely even more on one source, even more on Russia, on Gazprom”, she said.

According to her, sanctions were not a solution and should be ultima ratio “, but if we cannot put a brake in other ways in this project, then I am in favour of the sanctions”.

Optimism with the new government in Berlin

“I hope that we will have a new start with the new German government in relations with Ukraine”, she said, referring to the new government in which the Greens are a key coalition partner. “I do hope that we can even have a closer look when the certification process is being assessed, then the opinion of the Commission will come to the German regulator and then again the ministry for the economy will have a different view”.

“We have a good minister for the economy (Green party co-chair Robert Habeck), I trust in fully, the same is true for our minister for foreign affairs (Annalena Baerbock, the other co-chair of the Greens), she is great, she knows the situation, she has always been against this project, and I guess together, they will use all the opportunities they have in their hands politically and legally to make the best out of it”, she said.

Von Cramon-Taubadel also said she hoped the German Greens would try to convince some of “Gerhard Schröder’s social democrats” that Nord Stream 2 is not a good project for the German consumers and Ukraine”.

Schröder, the German chancellor from 1998 to 2005, now works as a high-level lobbyist for Gazprom.

[Edited by Alice Taylor]

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