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:

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