Thursday, January 9, 2020

TurkStream: Turkeys role as gas transit hub

With the TurkStream pipeline under construction Turkey is about to gain a pivotal role in the gas import of the EU.

TurkStream's pathway begins in russian Anapa on the Black Sea coast to the thrace part of Turkey and then moving through Bulgaria, Serbia, Hungary to the Baumgarten gas hub in Austria.

This pipeline will yet again raise the import of natural gas from russian sources  - under circumvention of countries like Ukraine -  while it increases the dependency of Turkey from russian imports as well.

German newspaper "Welt" writes:

"Half of the total capacity of the pipeline, 15.75 million cubic meters per year, is destined for transit to Europe. 
In the medium term, the pipeline is to bring Russian gas to Austria via Bulgaria, Serbia and Hungary, to the largest European natural gas hub in Baumgarten on the Slovakian border. The new pipeline from the Turkish territory through Bulgaria and Serbia has already been completed. 
Contrary to the EU goal of diversifying gas imports and increasing energy security - for example by promoting liquefied petroleum gas imports and the requirements for decoupling production and pipeline ownership - the countries of Southeast Europe are even further expanding their dependence on Russia with TurkStream. 
Putin lures the countries with transit fees and flatters their regional ambitions. For example, in the case of Bulgaria, which wants to establish itself as an important natural gas hub for the Balkans, but has so far only imported Russian gas. 
At the same time, TurkStream is a competition project for the EU-partially financed Southern Gas Corridor, which is to bring ten billion cubic meters of gas annually to the EU via the Transanatolian Pipeline (TANAP) from Azerbaijani offshore fields in the Caspian Sea. 
While Bulgaria's dream of the "Balkan Gas Hub" can still fail due to EU regulations, Turkey has established itself with TurkStream as an energy hub - this has long been Erdogan's plan. 
"Turkey is striving to become an energy hub where buyers and sellers meet and where prices are set," said the Turkish energy minister Fatih Dönmez in November 2018. 
For this, Erdogan even appears to be ready to increase its own energy dependency on Russia. Turkey has virtually no gas reserves of its own and is dependent on imports. Therefore, just like Europe, the country had tried in the past to diversify its own energy supply and to make itself less dependent on Russia."

EastMed: a pipeline from Israel to Italy

On Thursday January 2nd 2020, Greece, Cyprus and Israel signed an agreement to build the EastMed pipeline to transport natural gas from the Leviathan field via Cyprus and Crete to mainland Greece and on to Italy. Cypriot gas fields are also to be connected.

The construction of the more than 1,800 km long tube is being supported by the EU, which gave the project the privileged status of "Project of Common Interest".

However this project means a turning away from the Eastern Mediterranean Gas Forum (EMGF) that involved Egypt, Israel, Jordan, Cyprus, Italy and members of the Palestinian National Authority. 

Also turkish president Erdogang wants to have his say since Turkey stakes out claims on part in Cyprus.

You can read the rest of the piece via the below link:

Finland diversifies gas import, disengages from Gazprom

The russian department of german international broadcaster Deutsche Welle announced that Finland is going to import gas from Estonia now:

"The Russian company Gazprom Export, a subsidiary of the Gazprom corporation, has ceased to be the only gas supplier to Finland. As AFP reported on Saturday, January 4, citing the Estonian national electricity operator Elering AS, the bi-directional Balticconnector gas pipeline between Inkoo municipality in southern Finland and Paldiski in northern Estonia was commissioned on January 1. It will allow delivering gas to Latvia via Latvia from Estonia, received, in particular, from Norway."

You can read the rest of the piece using a translator via this link.

Tuesday, December 24, 2019

Nord Stream 2: German government invented russian-ukrainian gas-deal

In attempt to prevent the announced sanctions against pipelaying companies involved in the construction of Nord Stream 2, a head of deparment in the german State Department claimed thad Russia and Ukraine have found a settlement on the gas transit coming into effect at 2 p.m. next day and therefore sanctions would be unnecessary.

Yet no agreement have been signed between the two parties, only a framework agreement.

German government officials keep claiming that the sanctions would jeopardise the negotiatons between Russia and Ukraine on the gas transit until completion of Nord Stream 2.
However the sanctions made evident, that the sanctions strenghten the negotiation position of Ukraine.
Russia has even payed out an amount of 2,8 bn EUR that has been adjudicated to Ukraine by a Stockholm arbitration court in order to resume gas flow through Ukraine. Something Russia wouldn't have done without this pressure.

For more information see link below:,jsPageReloaded=true.bild.html#remId=1653633268651247761

Sunday, December 22, 2019

Nord Stream 2: sanctions are in effect

As anticipated, U.S. President Donald Trump signed off on legislation allowing Washington to issue sanctions on firms involved in the €10 billion pipeline.

Swiss-dutch pipelaying-company Allseas has immediately stopped their activities on Nord Stream 2 after the entry into force of the sanctions explaining: "Allseas will proceed, consistent with the legislation’s wind down provision and expect guidance comprising of the necessary regulatory, technical and environmental clarifications from the relevant US authority."

To german government spokeswoman Ulrike Demmer the sanctions "hit german and european companies" [n.b. no german company is designated by the sanctions], and "constitute an interference in [our] internal affairs".

U.S. ambassador to Germany, Richard Grenell, views the sanctions as deeply pro-European.

See more information here:

Friday, December 13, 2019

The impact of the EU General Court's OPAL decision

An interesting view by Alan Riley of the Atlantic Council in the OPAL ruling and its possible impact on Nord Stream 2:

"The OPAL judgment from the European Union (EU) General Court will undermine Gazprom’s market dominance in Central and Eastern Europe.
Case T-883/16 Republic of Poland v. European Commission (hereafter the OPAL case) is likely to have far more impact on European energy policy than just limiting Gazprom’s capacity to export natural gas via Nord Stream 1. In the OPAL case, the judges of the EU General Court established and elaborated a broad principle of energy solidarity drawing upon Article 194(1) of the Treaty on the Functioning of the European Union (TFEU). This principle of solidarity, which will require member states, in all their energy market decisions with a potential cross-border impact, to take into account not only their own interests but also those of other member states and also those of the European Union as a whole, is likely to have a significant impact on the development of European energy law over the next decade. It will no longer be possible for member states to develop energy infrastructure while ignoring the vital interests of other member states. The OPAL case will also provide a basis for the European Commission, member states, and other interested parties to bring legal challenges against those member states who infringe the principle of solidarity.
More immediately, in addition to the OPAL pipeline, the OPAL case is likely to have an impact on Nord Stream 2, potentially making the path to full utilisation of the pipeline much less likely than it previously seemed. The OPAL ruling, for instance, makes it more difficult for Nord Stream 2 to pass the process of security of supply certification required by Article 11 of the Gas Directive 2009. That same directive in Article 36 also imposes significant supply security and competition criteria before an exemption could be granted from its liberalisation requirements. Those requirements will be more difficult to fulfil post-OPAL.
The ruling is also likely to make it more difficult for Nord Stream 2’s owner, Gazprom, to deploy legal mechanisms and corporate structures to avoid the application of EU energy liberalisation law to the pipeline. The OPAL ruling will also bear down on the development of Turk Stream 2. As an import pipeline, it will also be subject to EU law on EU territory, and the local energy regulatory authority will be required to apply EU energy liberalisation legislation in the light of the OPAL ruling.
Overall, the OPAL ruling is likely to make it more difficult for Gazprom to do individual deals that benefit individual member states, but may harm other member states. As a result, Gazprom’s capacity to play one EU member state off against another has been limited by this ruling."

You can read the rest of the piece via the below link:

Thursday, December 12, 2019

Nord Stream 2 AG litigates against amended EU gas directive

Nord Stream 2 seeks arbitration in dispute with EU Commission. 

The Russian-owned Nord Stream 2 pipeline consortium filed a notice on Thursday (26 September), asking a tribunal of private arbiters to determine whether the European Union is in breach of its obligations under the Energy Charter Treaty (ECT).The move marks an escalation in the dispute opposing Nord Stream 2 and the European Commission, which carries risks for both sides. Settlements under the Energy Charter Treaty are sometimes in the billions of dollars.By amending its Gas Directive, Nord Stream 2 believes the EU has breached its obligations under Articles 10 and 13 of the Energy Charter Treaty, a legally-binding treaty originally signed in 1991 after the collapse of the Soviet Union.
In particular, the consortium argues that the amended directive discriminates against Nord Stream 2, in breach of the EU’s Article 10(1) obligation not to take such discriminatory action, and in breach of the EU’s general obligation to guarantee fair and equitable treatment for investors.
See more information here:

Some observers deem that the ECT litigation could be a shot in the foot of the pipeline operator:

"A further problem for NS2 is that the EU is permitted, under ECT rules, to raise legitimate objective justifications for its legislation in its defense. Contrary to NS2’s claims, the EU clearly has legitimate policy objectives in play. For instance, by imposing the same rules on import pipelines as it does domestic pipelines, it aims to create a single regulatory playing field. 
Equally, EU liberalization rules on ownership unbundling regulation, third party access, and tariff regulation, combined with the express supply security assessment required under Article 11 of the Directive, protect legitimate EU interests. These include ensuring additional natural gas supplies, enhancing competition, functioning of the single market, and supply security. They already apply to pipelines within the EU, so it is difficult to make a compelling case that import pipelines are being targeted or expressly discriminated. 
Furthermore, NS2 clearly threatens these legitimate EU interests. The pipeline does not provide any additional gas supplies to the EU; it merely shifts gas flows from the Ukrainian Brotherhood pipeline to NS2. By flooding the west-to-east EU pipeline interconnectors, gas flows from NS2 split the EU gas market in two. With gas flows from NS2 running through CEE states on pipelines controlled by Gazprom and its allies, the company’s market power will be increased across the region. The CEE states currently have some transit security as gas flows from the Brotherhood pipeline flow further west into Western Europe. NS2 removes that transit security.  
Another difficulty with NS2’s ECT litigation is that it invites additional unfortunate (from NS2’s perspective) responses from the EU, particularly that EU law already applied to import pipelines. The underlying argument of NS2 by contrast is that there has been ‘radical change’ in EU legislation: that import pipelines were not subject to EU energy law, and then unexpectedly were. The reality is somewhat different. The EU did adopt an amendment to the Gas Directive 2009, formally extending the Directive to imported pipelines. However, EU law clearly applied to import pipelines before the amendment came into force: the Yamal pipeline, which flows through Russia and Belarus before flowing into Poland, was subject on Polish territory to the full application of the Gas Directive 2009. 
NS2 is an offshore pipeline and Yamal is an onshore import pipeline, but it is difficult to see what turns on this point. Domestic law (absent a lex specialis) applies equally to the soil of the nation, its inland waters, and territorial sea. The new legislation itself makes no distinction between offshore and onshore pipelines, saying in the new Article 2(17) that EU law applies “between a Member State and a third country up to the territory of the Member States… or the territorial sea of that Member State.” Clearly, the Gas Directive applies to both onshore and offshore pipelines."

You can read the rest of the piece via the below link: