Way to bypass restrictions against “Nord Stream 2”

Gazprom’s contact with the Austrian OMV on gas supplies to Germany may make it possible to bypass European restrictions on the Nord Stream-2 gas pipeline under construction, said Maria Belova, research director at Vygon Consulting.

Way to bypass restrictions against "Nord Stream 2"

According to the current European legislation, half of the capacity of the gas pipelines entering the EU by sea must be given to independent suppliers. The exception applies to routes for which deliveries began before May 2019.

According to the Kommersant newspaper, a recent contract between Gazprom and OMV, which began on December 1, envisages annual gas supplies of about 6 billion cubic meters over 15 years. At the same time, the document does not concern gas sales to Austria.

As Belova explained, if gas purchases are made from Russian territory, OMV will turn out to be an independent supplier that will be able to use the facilities of Nord Stream-2.

“If four other European creditors of Nord Stream 2 – Wintershall, Uniper, Shell and Engie – buy 6 billion cubic meters from Gazprom each, this will amount to more than half of the pipeline’s capacity”, – the article says.

In mid-May, the Federal Network Agency refused Nord Stream 2 to exempt Nord Stream-2 from the requirements of the updated EU gas directive. According to the regulator’s decision, the gas pipeline was not completed by May 23, 2019, as a result, it falls under the amendments that have come into force with the norms of the third energy package of the European Union. Among other things, the directive requires that the pipeline entering the EU is either partially filled by an alternative supplier, or part of it, which runs through the Union, belongs to a third company.

The Nord Stream-2 project involves the construction of a gas pipeline with a capacity of 55 billion cubic meters per year from the Russian coast through the Baltic Sea to Germany. It is being implemented by Nord Stream 2 AG with the sole shareholder – Gazprom. European partners – Royal Dutch Shell, OMV, Engie, Uniper and Wintershall – are financing the project by 50% in total, that is, up to 950 million euros each.

The United States actively opposes the project, promoting its liquefied natural gas in the EU. The United States imposed sanctions against Nord Stream-2 in December, demanding companies to immediately stop laying the pipeline. The Swiss Allseas then almost immediately announced the suspension of such work.

In mid-October, Washington expanded economic restrictions against Nord Stream-2, extending the PEES package on the Protection of Europe’s Energy Security to the project. Companies that provide services, equipment, or funding to upgrade or equip vessels on the project are now eligible for sanctions.

Also, Washington intends to impose sanctions on insurance and certification companies cooperating with Russian ships in the completion of the gas pipeline. As reported by the German DPA agency, the American leadership is now contacting European firms and warning them of possible sanctions.

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