Nord Stream 2 will only make Europe’s gas problem worse

Paweł Majewski is the CEO of the Polish oil and gasoline firm PGNiG.

As gas prices have skyrocketed across Europe over the previous couple of weeks, members of the European Parliament have rightly suspected gasoline market manipulation and known as on the European Commission to investigate the role of Gazprom, Russia’s state-controlled pure gasoline exporter, amid the continuing surge. Regrettably, Gazprom has certainly typically utilized political strain by utilizing its market energy previously. This time isn’t any completely different.

Gazprom is utilizing record-high gasoline costs to create the deceptive impression that instant regulatory concessions are wanted to start out the operation of the Nord Stream 2 gasoline pipeline, so as to forestall a gasoline disaster within the upcoming winter. In reality, nevertheless, there’s loads of out there capability to provide Russian gasoline, and this new pipeline won’t present further gasoline volumes — it’ll solely substitute current provide routes. Given this, there are clear necessities of EU power legislation that should be totally carried out in terms of Nord Stream 2.

The International Energy Agency confirms that gasoline storage ranges in Europe are at present properly beneath their five-year common — however that is primarily the case for Gazprom’s storages. As a predominant provider to the European Union, Gazprom has market energy and isn’t shy of exercising it. The Russian exporter has been supplying much less gasoline and has not been filling its storages to realize satisfactory ranges earlier than heating season. It has additionally restricted capability bookings on the Yamal and Brotherhood pipelines, which have all the time transported gasoline from the East, and lowered gasoline volumes on spot markets.

Kremlin’s spokesperson has openly stated that fast regulatory approval of Nord Stream 2 and its operation would cut back gasoline costs — the strain is barely covert. Particularly provided that even with out Nord Stream 2, there’s extra out there gasoline transport capability from Russia to Europe than may ever be wanted.

Europe has beforehand skilled gasoline crises in 2009 and 2014. And each instances, Russia restricted gasoline provides to politically strain Ukraine, placing European economies at important threat. While the EU primarily remembers these two occasions, nevertheless, Poland has skilled seven gasoline provide disruptions since 2004. We know that Gazprom shouldn’t be prepared to play together with the EU’s gasoline market guidelines and has a historical past of abusing its dominant place.

In 2015, the European Commission had already ready an in depth Statement of Objections, figuring out Gazprom’s breaches of competitors guidelines, which undermined the EU gasoline market. Regrettably, in apply, the agreed commitments between the Commission and Gazprom didn’t result in enhancements within the functioning of the market. Since then, nevertheless, arbitration tribunals have confirmed the Commission’s findings on the excessiveness of Gazprom’s costs, requiring it to repay $1.5 billion to our Polish oil and gas company PGNiG and $2.9 billion to Ukraine’s Naftogaz.

This clearly reveals that non-market pricing had — and nonetheless has — an necessary position in Gazprom’s toolbox. Given its observe file and the way in which the pipeline is getting used even earlier than it’s operational, Nord Stream 2 will solely supply further devices to exert strain. And as rightly said by Poland’s late President Lech Kaczyński at first of Russian aggression in Georgia in 2008, this can undermine the safety of Ukraine, the Baltic states and the entire Europe.

Realistically, no EU guidelines may totally tackle all of the dangers related to the controversial pipeline. However, the complete implementation of EU power legislation to Nord Stream 2 may restrict provide dangers, offering no less than minimal mandatory ensures for power shoppers. Consequently, all necessities of the EU Gas Directive must be utilized to all the pipeline, particularly possession unbundling, nondiscriminatory and cost-reflective tariff setting and third-party entry.

As said, not way back, by European Commission President Ursula von der Leyen, Nord Stream 2 is a extremely political venture, and all authorized means must be used to make sure that EU legislation is totally carried out. Undermining a degree enjoying discipline within the power market counters EU power coverage and goes towards the pursuits of the EU and its member international locations. On this, the EU should be united and converse with one voice.

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