GAZPROM: MARKET DECIDES
According to NATURAL GAS EUROPE, Germany's networks regulator Bundesnetzagentur told NGE that it was not assuming Nord Stream 2 will go ahead.
A spokesman said the regulator, whose gas remit covers only onshore pipelines, also said it had not been asked to state the terms on which the gas from Nord Stream 2 would enter the grid. "We are working with two scenarios in our network planning," he said June 16. "Nord Stream 2 plays a role in our calculations of gas needs in Germany." One scenario is with Nord Stream 2 and the other is without it. He said a political agreement was needed first with the European Commission as it is an international line.
At a light-hearted debate June 15 on the need for new infrastructure at a time of low gas prices, organised by the Energy Exchange, hosted by Hogan Lovells and chaired by Jonathan Stern, Gazprom's manager for European regulatory affairs Alex Barnes said that Nord Stream 2 "is going ahead, the pipes have been ordered."
Barnes said there was a lot of talk regarding the pipeline's compliance with the Energy Union but that this was "balderdash, baloney and a lot of other words beginning with a B." He attacked in particular the notion that the line would increase European dependence on Russian gas: "What determines dependence on Russian gas is what buyers buy," and the market decides that, he said. "Gas follows the price, as you saw with reverse flows to Ukraine. Poland buys gas from Germany, it will not be cut off by Nord Stream 2."
There is uncertainty about the pipeline as Gazprom owns half the pipeline and all the gas. This becomes problematic when the pipeline enters the European Union as some form of ownership separation is required by the EU's third energy package. Barnes said though that the European Commission's own legal service said the third package did not cover pipelines outside the EU; and that onshore pipelines would be completely in line with EU rules.
Barnes won the debate, despite confining his argument to the construction of that one pipeline, which even his opponent, Patrick Hebreard of consultancy CEG, had conceded in his opening remarks would be built if only because "top management" had decided that it was a good project. For the rest, Hebreard pointed to the 100bn m³/yr of spare import pipeline capacity and the 80% spare regasification capacity in Q1 2016 to show that Europe already had more than enough. Demand forecasts show no, or negative, growth so even if domestic production is shrinking there is no need for more."The message is, there is a lot of spare capacity. The next big source of supply is US LNG and there is lots of capacity in western Europe."
As for central and southern Europe, those projects were mainly interconnectors and reverse-flow in order to satisfy diversification aims, part of the so-called projects of common interest. Lines will not be stopped because of the costs involved, he said – with the notable exception of Gazprom's South Stream/TurkStream project. When that was unexpectedly scrapped, Gazprom had to settle up with offshore pipeline layer Saipem for early termination of contract.
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