Page 7 - FSUOGM Week 46 2021

FSUOGM PIPELINES & TRANSPORT FSUOGM

German regulator suspends Nord

Stream 2 certification

EUROPE IN a surprise decision, the German Bundesnet- acceptable to, the Bundesnetzagentur.
zagentur, responsible for awarding the certifi- “It's a power play given the timing with events
The German regulator cation that would allow the controversial Nord concerning Ukraine and Belarus, but one that
said it would probably Stream 2 gas pipeline to go into operation, has still makes clear Germany wants the pipeline to
take four months to decided to suspend the process until its holding be functional,” says Birman Trickett.
consider the application company has reorganised its legal structure to The decision comes a day after the agency
after the changes had conform with German law, the body said in a announced that Ukraine’s natural gas company
been made. tweet. Naftogaz will participate in the certification of
The Bundesnetzagentur said once these Nord Stream 2. As participants in the process
changes have been made it would resume its have no veto analysts were unperturbed by the
work and probably take the four months man- announcement, which was seen largely as a PR
dated to consider the application. The upshot of victory for Ukraine.
the suspension of the Bundesnetzagentur work is Naftogaz CEO Yuriy Vitrenko said: “We
that it is now highly unlikely that Nord Stream 2 welcome BNetzA’s decision to accept Naf-
will come online this winter. togaz’s petition to intervene in the certifica-
Prices for natural gas spiked on the news, ris- tion of the Nord Stream 2 operator. We have
ing back above $1,000 per thousand cubic metres significant legal and commercial interests in
after they had fallen in the last week to around the European gas market and are encouraged
$700-$800 after Russia’s gas company Gaz- by the fact that BNetzA is willing to exam-
prom began to increase supplies of gas to its ine the issue from different angles. Our view
EU-based storage facilities. remains: the Nord Stream 2 pipeline operator
“The certification procedure will remain cannot be certified unless it complies with all
suspended until the main assets and human requirements of EU competition and energy
resources have been transferred to the subsidi- law. There can be no special treatment for
ary and the Bundesnetzagentur is able to check Gazprom,” Vitrenko said.
whether the documentation resubmitted by the “At the moment, the Nord Stream 2 pipeline
subsidiarity, as the new applicant, is complete. is endangering Germany’s and Europe’s secu-
When these requirements have been fulfilled, rity of supply. It is anti-competitive, and will not
the Bundesnetzagentur will be able to resume its provide necessary additional gas transportation
examination in the remained of the four-month capacity either to Germany or to Europe. More
period set out in law. Produce a draft decision than enough excess transit capacity exists today,
and delivery it to the European Commission for but is not being used by Gazprom in its existing
an opinion, as provided for in the EU legislation contracts with Ukraine’s Gas Transmission Sys-
on the internal market,” the Bundesnetzagentur tem Operator. We see no justifiable commercial
said in a tweet. purpose for Nord Stream 2,” Vitrenko said in a
“If the pipeline is going to be certified, it will press release.
have to comply with EU regulations for third- The new decision may be an attempt to crank
party access, giving Rosneft, BP and other firms up the pressure on Russia after Gazprom decided
an opening to sell volumes via the pipeline in not to book any additional transit capacity via
the future. BP CEO Bernard Looney has made it Poland and Ukraine for December.
clear his company would be happy to participate “At this point, it's a question of who blinks
if Rosneft receives the legal right to export gas,” first. It's easy to bemoan just how foolish this
Nicholas Birman Trickett, a commodities ana- move is for consumers, myself included, in
lyst, said in a newsletter. Europe and it will worsen short-run energy price
Increases in Russian throughput into Europe inflation. I'm less sure it's a mistake and think it's
are operating off a low base and can't make up the an intelligent bit of diplomacy, particularly with
shortfall with domestic demand at record levels Ukraine's past offer of a considerable discount
too, which analysts say means that prices will stay for pipeline capacity that may be revisited,” says
high all winter now there will be no respite from Birman Trickett.
an early approval of Nord Stream 2. Gazprom has a firm take-or-pay contract
The length of the delay will depend on how with Ukraine for 40bn cubic metres per year for
long it takes decision-makers in Moscow to work 2021-24. Thus gas transit through the country is
out a legal arrangement ending Gazprom's pipe- unlikely to fall below this level in the next three
line export monopoly, something it has resisted years. However, after the launch of NS2, Gaz-
for years. prom might redirect gas flows from the Ukraine
And once the Kremlin has worked out a new transit route after 2024, VTB Capital (VTBC)
scheme then this has to be presented to, and be said in a note. ™

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