EU to rule on Russian access to Nord Stream gas pipeline's link to Germany

6/9/2016

BRUSSELS/MOSCOW (Reuters) -- Brussels is expected to rule next month on whether to allow Russia to pump more gas via its Nord Stream pipeline's gas link to Germany, risking fresh discord between member states over energy dependence on Russia, EU and Gazprom sources said.

Full access to Opal, which provides a land link between Russia's Nord Stream pipeline to Germany and the Czech Republic, is crucial to Gazprom's plan to double capacity of the undersea pipeline in a project known as Nord Stream 2.

The expansion would see more Russian gas bypass Ukraine—a move seen depriving Kiev of transit fees as the route for more than half of Russian gas supplies to Europe.

The Nord Stream 2 project is one of the toughest issues on the table as European Commission President Jean-Claude Juncker plans to meet President Vladimir Putin next week.

Germany's Energy Regulator Bundesnetzagentur said it has struck a deal with the Russian state energy company to bypass EU anti-monopoly rules capping Gazprom's use at half of the Opal pipeline capacity. The gas giant declined to comment.

Because Gazprom is also part-owner of the pipeline, it is regulated by a 2009 EU law, known as the Third Energy Package, that seeks to prevent energy suppliers from dominating infrastructure.

Gazprom has long fought an EU decision requiring it to auction gas in order to gain greater access to the pipeline, but talks on reaching a settlement collapsed in 2014 after Russia's annexation of Ukraine's Crimea region.

Germany's support for Nord Stream 2, which would see most Russian gas exports pumped directly to its shores, has pitted it against eastern European nations.

Poland, Slovakia and other EU member states say the project strips Ukraine of transit fees and increases dependence on Gazprom, which supplies around one third of EU gas.

The Nord Stream 2 consortium, including E.ON, Wintershall, Shell, OMV and Engie, says the project is purely commercial.

The EU executive has the final word on Germany's settlement with Gazprom on access to Opal. A European Commission spokeswoman said it was notified on May 13 by the Bundesnetzagentur.

"The internal procedures for the Commission decision concerning Opal have now started again," the spokeswoman said.

Under EU rules, the executive has two months to assess the draft decision, but it has repeatedly prolonged previous deliberations.

A positive ruling on Opal would help Gazprom build Nord Stream 2, which has not received EU regulatory approval.

"It would be a sign of thaw in relations between the company and the European consumers," said Andrey Polishchuk, an analyst in Raiffeisenbank in Moscow.

It would also lower the cost of shipping gas across the Baltic Sea route by some 25%, Mikhail Korchemkin of East European Gas Analysis said.

(Reporting by Alissa de Carbonnel and Vladimir Soldatkin. Editing by Alexandra Hudson.)