Ukraine Sues EC over Opal Decision

Naftogaz Ukrainy is suing the European Commission at the General Court of the European Court of Justice in order to force it to reverse its October 28 decision to allow Gazprom significantly greater use of Opal capacity and – therefore – of Nord Stream, it said March 29.

The 27.5bn m³/yr Nord Stream line, owned half by the Russian export monopoly and half by European energy companies, runs under the Baltic Sea and allows it to avoid shipping the same amount of gas through Ukraine. But European Commission restrictions on the use of Opal capacity, on competition grounds, mean Gazprom cannot use Nord Stream fully – even if the decision was found lawful it has a ceiling of 80%, but normally its limit is 50%.

Ukraine's state gas enterprise said March 29 that, by acting without consulting with Ukraine, the EC broke Article 274 of the agreement of association between Ukraine and the European Union as well as the EU’s obligations under the Energy Charter Agreement and the agreement on the formation of the Energy Community.

Naftogaz bases its argument on the fact that the decision was taken without the commission’s competency; that it contradicts the Third Energy Package; and that it does not foster competition. It also threatens the security of gas supplies to Ukraine and other east European countries and the effective functioning of the internal market of the EU and the Energy Community as it increases the power of Gazprom and its affiliates, it said.

Routes of Nord Stream 1&2

Source: Gazprom

Poland, another Russian gas transit country, sued the EC on similar grounds last December; that case is still being heard in a court in Dusseldorf and, in the meanwhile, flows are at the reduced 50% rate.

The Opal line, operated by a Wintershall-Gazprom joint venture, brings gas south from northern Germany to the Czech Republic. Earlier this month Gazprom made concessions concerning its gas marketing methods in Europe, including the use of hubs as the prevailing price mechanism and different delivery points. These are out for consultation until early May, with the European Commission able to make further changes depending on the feedback.

Gazprom is planning to double the capacity of Nord Stream through another line, running parallel (see map). Once the gas arrives in Greifswald it will flow where shippers book capacity for it.

William Powell