Saturday, July 17, 2021

OPAL: Germany loses appeal; possible repercussions on Nord Stream 2

 As well known, Germany has lodged an appeal against the EUGC decision concerning the quantity of gas passed through the OPAL pipeline. The ECJ rejected this appeal

Handelsblatt writes:

In the dispute over the expansion of Russian gas supplies, Germany suffered a defeat before the European Court of Justice (ECJ). In a judgment published on Thursday, the ECJ rejected Germany's appeal against a decision by the EU court. Specifically, it is about larger delivery volumes through the Opal pipeline, an extension of the first Nord Stream pipeline in the Baltic Sea, which has been in operation since 2011 and through which Russian gas is transported to Europe (Case C-848/19).

Poland had filed a lawsuit against the larger delivery quantities before the General Court of the European Union (EU-G), arguing that they endangered the country's security of supply and violated the principle of energy solidarity. The court upheld the action, whereupon Germany appealed to the ECJ, which has now been rejected.

In September 2019, Poland had a decision by the EU Commission stopped at first instance, which allowed the Russian Gazprom group to make greater use of the Opal pipeline (case T-883/16). Gazprom was originally only allowed to use half the line capacity in order not to put other suppliers at a disadvantage. With a resolution from 2016, the EU Commission allowed Gazprom to significantly increase delivery volumes at the request of the Federal Network Agency. The ECJ has now confirmed that this decision was rightly declared null and void by the EU-G.

A previously published opinion by the Court of Justice stated that Germany "essentially asserts that energy solidarity is merely a political term and not a legal criterion". Accordingly, no direct rights and obligations could be derived from it.

The supreme court of the EU is now contradicting this. Since the principle of solidarity underlies all the objectives of the Union's energy policy, it cannot be assumed that it does not produce any binding legal effects. The principle includes rights and obligations for EU countries.

According to Advocate General Campos Sánchez-Bordona, the judgment may also have an impact on the controversial Nord Stream 2 Baltic Sea pipeline. In his report, he writes that it could become more difficult for Gazprom and allied companies to "benefit from a temporary exemption from the application of Union provisions (...) to the Nord Stream 2 gas pipeline (...)".

These Union provisions prescribe free and fair competition in gas flows. Gazprom's hopes for advantages in the energy market after the completion of Nord Stream 2 should be dampened accordingly. The construction of the Nord Stream 2 Baltic Sea pipeline has been criticized by parts of Europe and the USA. The pipe-laying work has been nearing completion for some time. However, there was always resistance from other countries.

In the opinion of the deputy chairman of the Green parliamentary group in the Bundestag, Oliver Krischer, the consequences of the judgment should not be underestimated. "It is an essential component that the gas transit through Ukraine is needed on a long-term basis," he said.

With Nord Stream 2, Russian gas is to be brought to Germany bypassing Ukraine. The USA and some Eastern European NATO partners fear that Europe is too dependent on Russian energy supplies.

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