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Gazprom gets improved Opal terms

The European Commission has decided to allow Russian gas export monopoly Gazprom to use 30% more of the capacity in the Opal gas line.

Gazprom gets improved Opal terms

The European Commission has decided to allow Russian gas export monopoly Gazprom to use 30% more of the capacity in the Opal gas line – or another 10.8bn m³/yr – while introducing more stringent conditions to ensure fair and non-discriminatory access, it said October 28, 2016.

The decision is the second piece of good news for Gazprom in one week, coming shortly after the EC said it was down to Gazprom to suggest new ways of doing business in Europe and so avoid a potentially multi-billion dollar fine for anti-trust behaviour.

The EC's key aim of secure and affordable supplies is linked to another: properly-functioning liquid and competitive gas markets.

It says the new Opal rules will allow energy companies to trade freely and have easy access to pipelines. Since its launch in 2011, Opal has enjoyed 100% exemption from EU internal energy market rules on third party access and tariff regulation.

But Opal strengthened the position of the dominant suppliers of gas to the Czech Republic, and so Gazprom was limited to half the capacity of the 36bn m³/yr line, unless it introduced a gas release programme on the German-Czech border. It did not do this, which meant there was a consequent reduction in the amount of gas it could flow through the 55bn m³/yr Nord Stream line that crossed the Baltic Sea from Russia to Germany.

Now, according to the revised decision, only half Opal's capacity will be exempt from third party access rules and the operation of the other half of the capacity will be covered by stringent EU market rules. These rules ensure transparent and non-discriminatory access for all gas companies.

Moreover, additional conditions are now in place in order to create better trading possibilities for all market participants, the EC said. These include more reverse flow capacity and new LNG import facilities along the coastline of northeast Europe.

From now on, the EC says a «significant amount» of the pipeline's capacity has to be made available as a reliable – so called «firm» – capacity for competitors. This has been set at 20% but the EC says it may revise this threshold further upward. In addition, companies with a dominant position on the Czech market are not allowed to outbid other users of the pipeline for this capacity.

The exemption framework will, as was the case under the earlier decision, be applicable until 2033. Following this date, standard regulatory provisions will fully apply to the Opal pipeline. The decision is binding on the German energy regulatory authority with immediate effect, the EC said.

Undertakings or groups of undertakings with a dominant position in the Czech Republic or which control more than 50% of natural gas arriving at Greifswald may bid for this capacity only at the base price. The base price may not exceed the average price of comparable capacity on other pipelines.

The German networks regulator Bundesnetzagentur has to monitor and report on the effectiveness of the Opal decision for improving competition on the Czech market and the Opal operator will be certified under the applicable unbundling provisions.

Separately, the EC is waiting to see Gazprom's remedies for settling the five-year anti-trust case. If the EC then agrees to these, the Russian giant will not be fined. However they must first pass a market test, which will allow third parties to comment on them.

To read this news in Russian.

Author: William Powell

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