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EU court annuls EC decision giving Gazprom more access to OPAL link

Highlights

Court finds EC breached EU energy solidarity principle

Ruling applies immediately, EC has deadline to appeal

Gazprom's access reverts to 12.8 Bcm/year of OPAL

Brussels — The EU's General Court in Luxembourg has annulled the European Commission's decision in October 2016 to allow Russia's Gazprom access to more capacity in Germany's OPAL gas link, saying the EC breached the EU energy solidarity principle.

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The ruling means Gazprom's access reverts to the conditions before the EC decision, limiting it to 12.8 Bcm/year of the OPAL line's 36.5 Bcm/year capacity.

The EC's decision had allowed Gazprom to bid for up to 12.8 Bcm/year of extra capacity in OPAL, which is linked to Russia's 55 Bcm/year Nord Stream pipeline across the Baltic Sea direct to Germany.

The ruling applies immediately, a court spokesman said Tuesday. This means Gazprom will not be allowed to bid for more extra capacity, and the status of any extra capacity it has already booked for future dates is now uncertain.

OPAL's operator OGT, which is responsible for selling OPAL capacity, said Tuesday that it had acknowledged the court's ruling and was "investigating" the court's explanatory statement.

EC CAN APPEAL

The EC has two months and 10 days to appeal the court's ruling.

The EC could ask as part of the appeal for the ruling to be suspended while the appeal is heard, which, if the court grants this, would reinstate the EC's October 2016 decision until the court's final ruling on the appeal, the spokesman said.

There is no specific deadline for reaching final rulings on appeals, but they usually take less time than the original case.

The Polish government in December 2016 asked the General Court to annul the EC's decision, citing concerns that allowing Gazprom increased access to OPAL boosted flows through Nord Stream at the expense of existing routes, threatening the security of Poland's gas supply.

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The court found that the EC had not assessed this impact on Poland, and therefore breached the EU's energy solidarity principle by adopting the decision.

BOOST FOR UKRAINE

Polish energy minister Krzysztof Tchorzewski hailed the court's ruling as "proof of the legitimacy of Poland's allegations," adding that it would also help Ukraine in its fight to continue transiting Russian gas to Europe.

Ukraine's gas transit contract with Russia expires at the end of this year, and the two countries have so far failed to agree terms for 2020 onwards.

Limiting Gazprom's access to OPAL means Gazprom will be forced to flow less through Nord Stream, according to a statement from Poland's energy ministry Tuesday.

This means "it will not be able to completely abandon gas transit through Ukraine, and [Russia] will be forced to continue trilateral negotiations with the EC and Ukraine" for new transit terms, the ministry said.

The next round of these negotiations is planned for September 19 in Brussels.

"Poland's victory in this case reduces the likelihood of a serious gas crisis in Ukraine, which could also impact other countries in the region, including Poland," Tchorzewski said Tuesday.

He also thanked the Latvian and Lithuanian governments for their support during the court case.

-- Siobhan Hall, siobhan.hall@spglobal.com

-- Edited by Alisdair Bowles, newsdesk@spglobal.com