Page 6 - FSU OGM Week 26 2021

FSUOGM COMMENTARY FSUOGM

The Lakhta centre in St
Petersburg, Gazprom's
headquarters.

capacity of its system, whether because of main- Russian law, only Gazprom is allowed to use the
tenance or other operational reasons. country’s gas export pipelines, and Moscow is
"We should acknowledge that the limited reluctant to end this monopoly through fear of
capacity available for Gazprom in Febru- creating competition between Russian gas sup-
ary-April may have constrained Gazprom from pliers overseas, weakening its revenues.
shipping additional gas into the EU, which could Nord Stream 2 is fighting the amendments
have eased the low storage levels we see today, to the gas directive in court, but so far without
and thus prices, a bit," he said. success. German regulator Bundesnetzagentur
Then in May, GTSOU again offered 15 mcm confirmed on June 24 that Nord Stream had
per day of firm capacity but a further 64 mcm requested certification as an independent trans-
per day in interruptible capacity, the analyst mission system operator (TSO). But unless it
explained. Interruptible capacity is usually manages to overturn the EU amendments, this
offered when a pipeline operator cannot guar- request will be denied.
antee capacity is available, and therefore it is sold Gazprom could try to get around the third-
at a discount. But GTSOU is instead charging party access issue by holding auctions for Nord
Gazprom the same rate as for firm capacity on Stream 2’s capacity in Russia, while creating auc-
the Russian border, according to Ruseckas. tion conditions that in reality make it impossible
"An inferior product at a premium price! And for any other companies to book space. But the
without any operational basis I can see for doing EU could argue that this practice does not follow
so," the analyst said, adding that Gazprom might the spirit of the law even if it follows the letter of
not trust GTSOU not to disrupt the capacity "for the law.
non-operational or tactical reasons." Another risk is that the US does not lift its
"I am not surprised that Gazprom is reluctant sanctions. The existing ones could make it diffi-
to auction gas to EU buyers - creating a contrac- cult for Nord Stream 2 to obtain technical certi-
tual obligation to deliver gas – based on the use fication to start operating. Norway-based quality
of interruptible capacity in Ukraine 22/24," he assurance firm DNV had been due to certify the
said. pipeline but pulled out in early January citing
sanctions.
Remaining obstacles Even if Biden’s administration decides to lift
While the US softening its stance is a welcome the sanctions, such a decision could be chal-
development for Gazprom, Nord Stream 2 lenged in either the House or the Senate. There is
is not out of the woods yet. The pipeline still bipartisan opposition to Nord Stream 2 among
faces a number of obstacles, one of which is EU US lawmakers.
regulation. A third possibility is that Germany drops
Changes to the EU’s Gas Directive in 2019 its support for Nord Stream 2, which would
apply the bloc’s energy liberalisation rules, surely seal its fate. German Chancellor Angela
including those on unbundling and third-party Merkel’s support for the project has held firm
access, to pipelines to and from non-EU coun- despite multiple crises in Russian-EU relations
tries. This could mean Gazprom would to have in recent years, including the poisoning of
to divest Nord Stream 2 and possibly allow other Russian dissident Alexei Navalny last August.
suppliers to use its 55bn cubic metre capacity. However, Germans will vote in late September
Divesting the pipeline is not such a hurdle. for a new federal parliament, and the Greens,
But as the pipeline runs from Russia directly which oppose Nord Stream 2 on environmental
to Germany, Gazprom’s only choice to comply grounds, are expected by most pollsters to get
with third-party access rules would be to allow the highest number of seats after Merkel’s own
competing Russian companies to use it. Under CDU/CSU alliance. ™

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