Nord Stream 2 Seeks 'Fair Treatment' from EC
The Gazprom-owned Nord Stream 2 pipeline company (NS 2), based in Switzerland, has written to the president of the European Commission (EC), Jean-Claude Juncker, asking for guarantees of fair treatment for the 55bn m³/yr project, it told NGW April 26 in an email.
The amended Gas Directive must not treat Nord Stream 2 worse than other comparable import offshore gas pipelines in which investments have already been made long before the adoption of the amended directive, it said.
The letter was served as a notification under Article 26 of the Energy Charter Treaty (ECT). Nord Stream 2 said it respects international and EU law rules and believes that they should properly apply to its project, in particular, the fundamental principles of non-discrimination and protection of legitimate expectations, said NS 2.
NS 2 falls under the Gas Directive in the territorial sea of the first interconnection with an EU member's network: Germany. Article 49a of the amended Gas Directive foresees a derogation possibility in relation to import offshore pipelines that are "completed" before the new provisions enter into force, which is expected to happen during summer 2019. The derogation allows member states not to apply key provisions of the Gas Directive concerning unbundling rules, third party access and tariff regulation to such pipelines.
According to the EC, the rationale of the derogation is "to take into account the legitimate expectations of existing operators and the previous lack of specific Union rules applicable to gas pipelines from third countries." Since 2015, Nord Stream 2 has invested more than €5.8bn in planning and building the pipeline.
It said: "When tabling its proposal, the EC explicitly stated that Nord Stream 2 was the only 'advanced' pipeline project that would be affected by the amendment. If Nord Stream 2 is not treated like other comparable import offshore pipelines in which investments have already been made before the adoption of the amended Gas Directive, this would be a breach of international and EU law rules, including the EU's obligations under the ECT in relation to Nord Stream 2 as an investor. It would be unreasonable and discriminatory for the EU to design the Gas Directive in such a way that only Nord Stream 2 is significantly affected by exposure to new rules while other import offshore pipelines are released from these rules through the derogation.
"NS 2 is raising this issue now with the intention to receive an official and prompt clarification from the EU that Nord Stream 2 will be eligible for treatment not worse than other comparable import offshore gas pipelines in which investments have already been made and which are entitled to request a derogation," its email concluded.
NS 2 might have been almost complete by now, but a lengthy delay to the Danish approval process means that the route through its waters is yet to be finalised. It is not expected to complete the line this year, meaning Gazprom will need to negotiate transit with Ukraine on an interim basis from next January.
Merkel ally vows to block NS 2: report
A major ally of Germany's chancellor Angela Merkel has vowed to do "everything in his power" to block NS 2, according to a report in the April 26 edition of The Times. Manfred Weber, the German conservative candidate to succeed Jean-Claude Juncker, said – in an interview with Polska Times calculated to win support for his candidacy – that the project will give Russia too much control over Europe's energy supply. "We need more independence from Russia gas," he said.
Weber's remarks were criticised by the Social Democrat party, whose senior MP Matthias Mersch, said that blocking NS 2 would make Europe dependent on US fracking or on nuclear energy. Merkel herself has been in favour of the pipeline, despite objections from other European Union countries including the UK and Poland.
Some of the concerns about NS 2 have had to do with the loss of transit revenue for Ukraine, which now receives about $2bn/yr from transiting gas. This is useful as the economy is weak. But new transport capacity is needed to bring gas from Russia to meet demand, and as the seller, Gazprom says it should be allowed to choose the route. As its production moves further north into Yamal, NS 2 represents a shorter and it says cheaper route.