The S&P Global Platts, an independent provider of information, benchmark prices and analytics for the energy and commodities markets, has published the latest S&P Global Platts guide to EU-Russian natural gas relations. The guide provides an analysis of relations between the EU and Russia in different natural gas-related areas and gives an overall assessment. The S&P Global Platts guide to EU-Russian natural gas relations explores key energy disputes having significant implications for the EU-Russian natural gas relations:

1. Gazprom access to OPAL gas pipeline in Germany
OPAL connects Nord Stream 1 pipeline (importing gas from Russia to Germany) and Germany’s GASPOOL hub. Although the OPAL pipeline is owned 80% by Gazprom/BASF and Gazprom has exclusive rights to 25.6 Bcm/year of its capacity, the European Commission restricted Gazprom’s access to 12.8 Bcm/year in order to address concerns about its dominant position in the Czech market. The dispute was settled in 2016 when the Commission allowed Gazprom to access up to 12.8 Bcm/year of extra OPAL capacity through public auctions. Nonetheless, Polish gas company PGNiG opposed and asked the Court of Justice of the European Union to annul the decision. Commission’s decision was temporarily suspended. The court is expected to rule on the dispute in 2019.

2. Nord Stream 2 pipeline project
The European Commission fiercely battles the Nord Stream 2 pipeline project, a new export 55 Bcm/year gas pipeline running from Russia to Europe across the Baltic Sea. In order to make key provisions of an internal gas market (including unbundling of transmission system operators, supervision by independent regulatory authorities, and third-party access to infrastructure, fair tariffs) applicable to all gas pipelines from non-EU countries, the Commission seeks to amend the Gas Market Directive. The amendments of the Directive were already approved by the Industry and Energy Committee of the European Parliament in April 2018. However, the Council of the European Union has not decided its position yet. The S&P points out that Nord Stream 2 has already received permits from Finland and Germany, and is on track for end-2019 start.

3. Antitrust case against Gazprom
In August 2012, the European Commission opened a formal investigation of restrictions on gas resales across borders and unfair pricing adopted allegedly by Gazprom in several EU member states (in Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia). The European Commission is still in advanced talks with Gazprom on commitments to resolve the case without a formal judgement.

4. EU Sanctions
According to the S&P Global Platts, EU-Russian gas relations are also significantly affected by sanctions imposed by the European Union on the Russian Federation in response to the crisis in Ukraine, in particular the illegal annexation of Crimea and the deliberate destabilisation of Ukraine. EU sanctions limit Russian access to European technologies and services for extraction of deep water and unconventional oil resources. In addition, the EU has adopted measures restricting Rosneft, Gazprom Neft and Transneft’s access to EU capital markets. Sanctions are supposed to apply until Minsk peace accords are fully implemented.

S&P Global Platts guide to EU-Russian natural gas relations concludes that despite long-running disputes over pipelines, competition and the crisis in Ukraine, Gazprom is expected to continue to supply high volumes of natural gas to the EU. Moreover, due to commercial benefits to both sides, volumes of Russian gas flowing to the EU are unlikely to change much in coming years.

S&P Global Platts,