EU's top court hits at Gazprom

Russian giant's access to Nord Stream pipeline link curtailed

Europe's top court overruled last Tuesday an EU decision allowing Russia's Gazprom to ship more gas via the Opal gas pipeline, which links its Nord Stream pipeline to Germany, news wires reported. The ruling is politically charged as Poland and other eastern European nations fight Gazprom's plans to double the capacity of Nord Stream and bypass legacy gas routes via Poland and Ukraine, Reuters commented.

In a 2016 decision that removed a long-time curb on Russian gas shipments to Europe, the Commission had lifted a cap on Gazprom's use of Opal. Since its completion in 2011, Gazprom has only been allowed to use 50% of the Opal pipeline under an EU ruling aimed at preventing dominance of the supply infrastructure.

The ECJ ruled last Tuesday 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 to other Member States. “The Commission did not carry out an examination of the impact of the modification of the exemption regime for the OPAL pipeline on Poland's security of supply,” the ECJ said in a statement. “Consequently, the General Court annuls that Commission decision.” A spokeswoman for the Commission did not comment on whether it would appeal the ruling, which it has the right to do within a little over two months.

The court in fact decided in favour of a challenge brought by Poland and its state-run gas firm PGNiG, arguing it would lead to a drop in volumes via competing pipelines. “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, which Kiev fears as its gas-transit contract expires in January. “Ukraine's negotiating position will improve significantly,” CEO Piotr Wozniak told reporters adding that gas volumes being sent through Ukraine would increase by at least 12.5 billion cubic meters, and flows through Nord Stream and Opal should soon fall by a similar amount.

The Opal decision and Gazprom's plan to build Nord Stream 2 play into fears of the Polish conservative government, which sees pacts between its powerful neighbours, Germany and Russia, as an existential threat. Germany, however, argues the project makes good business sense. “We need it,” deputy economy minister, Thomas Bareiss, told an energy conference on Tuesday.

Under current plans, Nord Stream 2 will be owned and operated by Russian gas export monopoly Gazprom, though 50% of the funding is provided by Germany's Uniper and BASF's Wintershall unit, Anglo-Dutch oil major Shell, Austria's OMV and France's Engie. Nord Stream 2, meanwhile, has also taken its battle to court. It is challenging new EU rules that it says endanger its business model.

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