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    Nord Stream 2 OK will need freer trade: Naftogaz


Russia needs to free up gas trade and allow European buyers to take gas at the border with Ukraine if it wants certification of its major new pipeline.

by: William Powell

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Nord Stream 2 OK will need freer trade: Naftogaz

Russia should allow European traders to buy Russian and central Asian gas at Ukraine's eastern border and then to book capacity independently in Ukraine as a precondition for certifying Nord Stream 2, the CEO of Ukraine's Naftogaz Ukrainy Yuriy Vitrenko said September 27.

According to the joint German-US declaration, Vitrenko said, the Russian-owned pipeline must comply with the spirit and letter of the European Union's third energy package if it is to operate.

He said that unbundling supply and demand was the primary requirement of the third package, from which arose third-party access and the subsequent booking of capacity at Ust-Luga, close to where the pipeline leaves Russia.

"It is very important for us that everything follows the solidarity principle as set out in the foundation document of the European Union," he said, referring also to the mid-July case won by the Polish state entity PGNiG against the European Commission, which established its legality. 

"When the German regulator comes to certify Nord Stream 2, it must also be satisfied that this pipeline will not be in a privileged position compared with others," said Vitrenko.

Guaranteeing freedom of access to Nord Stream 2 without at the same time freeing up capacity in the Ukrainian transit pipelines would violate the solidarity principle, he said. "One cannot ensure third party access only to Nord Stream 2. That would give it privileges over other Russian pipelines bringing gas from Russia to Europe, through Ukraine for example. The German regulator cannot certify Nord Stream 2 before Russia allows Ukraine to carry third-party gas. That will allow European companies to take title to gas at the Ukraine-Russia border and independently book transit capacity through Ukraine," he said.

Russian president Vladimir Putin and the state gas giant Gazprom were asserting themselves in Europe through the use of force, he said; while Ukraine's approach was based on legality, as its success in the long-running arbitration case in Stockholm demonstrated. "And our strategy is to continue nto rely on the law in the future too, " he summed up.

Without regulatory certification, the pipeline cannot legally operate. The owner is seeking to be certified as an independent transmission system operator, the least demanding of the European Union's regulatory models. Poland however is seeking to prevent this and is now involved in the German BNetzA certification process.

Nord Stream 2 AG is contesting in the courts the application of the third European gas directive to the offshore pipeline but it has applied for ITO status as a fall-back measure, without conceding the grounds for legal action. Central Asian gas has flowed to Ukraine in past years, but only with Russian approval and never in accordance with EU regulations.

No change in Germany just yet

Separately Germany's chancellor, Angela Merkel, an opponent of US intervention in Germany's energy policy, is likely to remain in post for months, while the two main parties that each won about a quarter of the votes fight to form a coalition. Merkel's party the CDU led by Armin Laschet saw its biggest loss of votes in years, garnering 24.1%; while the centre-left SDP under Olaf Scholz edged ahead by a percentage point with 25.7%.

In a televised debate late June, both said flows through the line, once operational, could be halted if Russia broke any of the terms of the Washington agreement. The leader of the Greens Annalena Baerbock has said the line should not be allowed to flow at all, as once it was operational, nobody would want to risk the political fallout from turning it off.