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Poland's PGNiG approved to take part in Nord Stream 2 certification process

Highlights

German regulator allows Polish company to give opinion

BNetzA has up to four months from Sept 8 for draft ruling

Nord Stream 2 start date key to European gas market balance

Poland's state-controlled PGNiG has been approved to take part in the German certification process for the Nord Stream 2 gas pipeline from Russia to Germany, it said late Sept. 22.

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PGNiG and the Polish government have long been opposed to Nord Stream 2, saying it threatens European energy security and could see Poland's role as a transit country for Russian gas to Europe reduced.

PGNiG and its German subsidiary PGNiG Supply & Trading (PST) submitted a request to the German regulatory authority, the Bundesnetzagentur (BNetzA), to be allowed to participate in the certification procedure earlier this summer.

"We are pleased with BNetzA's decision on granting both companies participation in the certification proceedings," PGNiG CEO Pawel Majewski said in a statement.

Switzerland-based Nord Stream 2 AG applied in late June for the certification as an independent gas transmission system operator with the BNetzA, which deemed the application complete in early September.

BNetzA has up to four months from Sept. 8 to publish a draft decision.

"PGNiG and PST are of the opinion that Nord Stream 2 AG does not meet the formal and substantive requirements for certification," PGNiG said. "Moreover, both companies argue that a positive decision of the BNetzA would put at risk the security of supply of the EU and member states," it said.

EU directive

The timetable for beginning commercial flows via the 55 Bcm/year capacity Nord Stream 2 is a key factor currently affecting the European gas market, with benchmark prices having reached almost Eur75/MWh mark on continued supply concerns.

Nord Stream 2 -- which will double the capacity of the Russian gas corridor in the Baltic Sea to 110 Bcm/year once operational -- has to comply with the amended EU gas directive on issues such as ownership unbundling, third-party access and tariff transparency.

"In the certification proceedings, we will seek to ensure that the owner of Nord Stream 2 cannot avoid the application of ownership unbundling requirements, third-party access and transparent tariffs which take into account the costs of the entire pipeline," Majewski said.

"We will prove consistently that Nord Stream 2 AG does not meet the formal and substantive requirements for the operator of the pipeline, in particular those relating to security of supply and the corporate structure of the company," he said.

Nord Stream 2 is now complete, but the start of operations will depend on the German regulator's decision.

PGNiG said that putting the pipeline into operation before obtaining a final certification decision would constitute a breach of German and EU law.

Once BNetzA publishes its draft decision, it then passes to the European Commission to give its opinion before being returned to the German regulator for a final decision, a process that could also take up to four months.

"Operating without a final certification decision would lead to discrimination of other energy companies and distortion of the competition on the internal gas market," PGNiG said.

"For this reason, PGNiG and PST reserve their right to use all legal measures to oppose such conduct of Nord Stream 2 AG."

Previous ruling

PGNiG has already been part of legal cases against Nord Stream 2, including the case that saw a German court in August reject an appeal by the pipeline operator on complying with the EU directive.

Nord Stream 2 AG in January 2020 asked the BNetzA for a derogation from the EU's amended Gas Directive rules, which came into effect in May 2019 and were subsequently transposed into German law.

Such a derogation would have allowed the German section of the pipeline to be exempted from ownership and third-party access rules, and requirements on transparent tariffs.

But the regulator rejected the application of Nord Stream 2 for a derogation, saying derogations could only be awarded for pipelines completed before May 23, 2019.

Nord Stream 2 AG's appeal against the rejection of its application for a derogation was rejected by the Dusseldorf Higher Regional Court in late August.

PGNiG and PST were "active participants" in the derogation proceedings, emphasizing that granting a derogation would be contrary to both the the EU and the German law.

"The effects of our involvement in the Nord Stream 2 case show that we can defend our position effectively," Majewski said.

"In the case of an application for derogation of the pipeline from the requirements of EU law, the Higher Regional Court of Düsseldorf shared the arguments raised by PGNiG and PST and dismissed Nord Stream 2 AG's complaint," he said.