Page 7 - FSUOGM Week 20

FSUOGM COMMENTARY FSUOGM
a statement that it had a month to evaluate the German regulator’s decision and consider fur- ther action, such as lodging an appeal.
“International legal experts have confirmed that narrowing the definition of ‘completed’ to the conclusion of the physical construction of a gas pipeline would violate the protection of legit- imate expectations and other fundamental rights in EU law,” it said.
Nord Stream 2 added it viewed the ruling as a breach of German constitutional guarantees.
Poland, which has long campaigned against Nord Stream 2, took some credit for the verdict. “[The] Poles’ energy security is one of the government’s priorities. We strongly oppose all monopolistic practices of foreign companies and attempts to divide European customers into bet- ter and worse,” Poland’s deputy prime minister, Jacek Sasin, said in a statement. “Today’s deci- sion of the German regulator, which rejected the Nord Stream 2 request for privileged treatment, is further proof of the effectiveness of our energy
policy.”
Poland has fought against the project for
years. Gazprom originally formed a consor- tium with European gas firms Uniper, Winter- shall Dea, Royal Dutch Shell, OMV and Engie to finance, build and operate the pipeline. But Polish regulators in 2016 succeeded in getting
the consortium disbanded on the grounds that it could undermine regional competition.
Gazprom’s five Western partners instead pro- vided 50% of the pipeline’s financing, leaving its construction and operation to Gazprom.
Implications
The German decision could mean higher costs and time delays for Nord Stream 2, which has already exceeded its €9.5bn ($10.5bn) budget because of earlier delays. Russia may have to set up a new operator for the pipeline that is independent of Gazprom. It is also unclear how third-party access will be ensured, as Gazprom is the only company allowed under Russian law to export gas via pipeline.
Other Russian gas producers such as Novatek and Rosneft have lobbied intensively over the years for the country’s export pipelines to be lib- eralised. But the government has resisted these calls, fearful that it will result in Russian com- panies competing with each other in Europe, driving down prices and cutting revenues.
Russia is likely to come up with a more inventive way of complying with EU regulation instead. Gazprom could, for instance, auction off Nord Stream 2’s capacity in contests under conditions that would make it hard for other companies to actually participate. ™
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