Naftogaz Must Decide Soon on Opal Appeal
Ukraine state-owned supplier Naftogaz has a few days to decide whether to appeal a March 2018 ruling against it by the EU General Court.
Naftogaz has declined to comment on the issue. It is believed its chances of winning any appeal are slim. An EU Court spokeswoman told NGW May 3 it cannot confirm if such an appeal has yet been lodged.
The case focuses on use of the 35bn m3/yr Opal pipeline in Germany: an onshore extension of the Gazprom-led 55bn m3/yr Nord Stream pipeline that runs beneath the Baltic from Russia to Germany.
The EU General Court on March 9 2018 rejected a Naftogaz request that the European Commission’s October 28 2016 decision be overturned. That decision, allowing Gazprom to use 90% of Opal capacity, was later upheld in rulings in July 2017 by both the EU’s General Court and a top German administrative court. Since then, the same EU court has upheld the EC decision, in cases brought by both Poland’s PGNiG and Naftogaz.
EU Court spokeswoman Holly Gallagher told NGW May 3 that the EU General Court dismissed PGNiG’s action as inadmissible on December 14 2017, but that PGNiG supported by the Polish state appealed to the European Court of Justice (ECJ). The ECJ is the EU’s supreme court, serving as an appeal court for EU General Court verdicts.
Poland also brought a separate challenge to the EC decision, now pending the EU General Court, and also sought an urgent ruling. Gallagher said the particular request for an urgent ruling was rejected on July 21 2017 by the same EU court.
By email, the court spokeswoman told NGW that the EU Court cannot confirm whether Naftogaz has yet lodged an appeal against the EU General Court’s March 9 2017 rejection of its request, adding that Naftogaz “does have a right to bring an appeal against this order within two months of the date on which it was notified of it.” It's understood that any appeal, if granted, would be heard before the ECJ.
Why is court action so important for Naftogaz and Poland?
Naftogaz, PGNiG and Poland are pursuing legal action as, if successful, it could impact on investment decisions for Nord Stream 2, the project to double existing subsea Nord Stream capacity
If Nord Stream 2 is built, Russian flows are expected to bypass Ukraine almost completely, which is why Germany recently tried to obtain a Russian guarantee that it would continue to transit some gas via Ukraine.
About half of Gazprom’s 194bn m³ exports to EU passed through Ukraine last year. Transits of Russia gas via Ukraine in the first four months of 2018 however are already 9% lower year on year.
Kiev hopes to receive $3bn fees from such gas transits in 2018. But Gazprom CEO Alexei Miller warned that Russia plans to decommission compressor stations and send no more than 10bn-15bn m³/yr gas flow through Ukraine after 2020, a warning he has since repeated.