Nord Stream 2 will only make Europe’s gas problem worse

As gas prices continue to soar, all legal means should be used when it comes to Russia's controversial pipeline.

Nord Stream 2 will only make Europe’s gas problem worse

Paweł Majewski is the CEO of the Polish oil and gas company PGNiG.

As gas prices have skyrocketed across Europe over the last few weeks, members of the European Parliament have rightly suspected gas market manipulation and called on the European Commission to investigate the role of Gazprom, Russia’s state-controlled natural gas exporter, amid the ongoing surge. Regrettably, Gazprom has indeed often applied political pressure by using its market power in the past. This time is no different.

Gazprom is using record-high gas prices to create the misleading impression that immediate regulatory concessions are needed to start the operation of the Nord Stream 2 gas pipeline, in order to prevent a gas crisis in the upcoming winter. In truth, however, there is plenty of available capacity to supply Russian gas, and this new pipeline will not provide additional gas volumes — it will only substitute existing supply routes. Given this, there are clear requirements of EU energy law that must be fully implemented when it comes to Nord Stream 2.

The International Energy Agency confirms that gas storage levels in Europe are currently well below their five-year average — but this is mainly the case for Gazprom’s storages. As a main supplier to the European Union, Gazprom has market power and isn’t shy of exercising it. The Russian exporter has been supplying less gas and has not been filling its storages to achieve adequate levels before heating season. It has also limited capacity bookings on the Yamal and Brotherhood pipelines, which have always transported gas from the East, and reduced gas volumes on spot markets.

Kremlin’s spokesperson has openly stated that quick regulatory approval of Nord Stream 2 and its operation would reduce gas prices — the pressure is barely covert. Particularly given that even without Nord Stream 2, there is more available gas transport capacity from Russia to Europe than could ever be needed.

Europe has previously experienced gas crises in 2009 and 2014. And both times, Russia limited gas supplies to politically pressure Ukraine, putting European economies at significant risk. While the EU mainly remembers these two events, however, Poland has experienced seven gas supply disruptions since 2004. We know that Gazprom is not willing to play along with the EU’s gas market rules and has a history of abusing its dominant position.

In 2015, the European Commission had already prepared an extensive Statement of Objections, identifying Gazprom’s breaches of competition rules, which undermined the EU gas market. Regrettably, in practice, the agreed commitments between the Commission and Gazprom did not lead to improvements in the functioning of the market. Since then, however, arbitration tribunals have confirmed the Commission’s findings on the excessiveness of Gazprom’s prices, requiring it to repay $1.5 billion to our Polish oil and gas company PGNiG and $2.9 billion to Ukraine’s Naftogaz.

This clearly shows that non-market pricing had — and still has — an important role in Gazprom’s toolbox. Given its track record and the way the pipeline is being used even before it is operational, Nord Stream 2 will only offer additional instruments to exert pressure. And as rightly stated by Poland’s late President Lech Kaczyński in the beginning of Russian aggression in Georgia in 2008, this will undermine the security of Ukraine, the Baltic states and the whole Europe.

Realistically, no EU rules could fully address all the risks associated with the controversial pipeline. However, the full implementation of EU energy law to Nord Stream 2 could limit supply risks, providing at least minimum necessary guarantees for energy consumers. Consequently, all requirements of the EU Gas Directive should be applied to the entire pipeline, especially ownership unbundling, nondiscriminatory and cost-reflective tariff setting and third-party access.

As stated, not long ago, by European Commission President Ursula von der Leyen, Nord Stream 2 is a highly political project, and all legal means should be used to ensure that EU law is fully implemented. Undermining a level playing field in the energy market counters EU energy policy and goes against the interests of the EU and its member countries. On this, the EU must be united and speak with one voice.

Source : Politico EU More   

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Iran set to return to nuclear talks in November

Announcement comes after US warned efforts to revive deal were in 'critical phase.'

Iran set to return to nuclear talks in November

VIENNA — Iran is ready to return to nuclear talks in Vienna before the end of November, Ali Bagheri Kani, the country’s deputy foreign minister, said on Wednesday after meeting with EU officials in Brussels.

“Had a very serious & constructive dialogue with @enriquemora_ on the essential elements for successful negotiations,” he wrote on Twitter, referring to Enrique Mora, the chief EU coordinator for the talks. “We agree to start negotiations before the end of November. Exact date would be announced in the course of the next week,” he added. 

Mora did not immediately confirm the statement but two Western diplomatic officials said Bagheri Kani’s announcement was correct.

The development paves the way for a resumption of talks between Iran and six world powers aimed at reviving the 2015 Joint Comprehensive Plan of Action (JCPOA), as the Iran nuclear deal is officially called. Negotiations have been stalled since June, when Iran elected hardline cleric Ebrahim Raisi to the presidency.

Iran had repeatedly stressed that it was ready to resume talks “soon” but refused to provide a clear date, leaving U.S. and European officials increasingly impatient and irritated.

“We could understand some hiatus to their transition … but at this point, it’s hard to find an explanation, an innocent explanation, for why they are taking so long,” U.S. Special Envoy for Iran Robert Malley told reporters in a press call earlier this week. He added that efforts to revive the accord were in a “critical phase.”

The uncertainty led to talk about a “Plan B” — what to do in case Iran does not come back to the table, given the fast acceleration of Tehran’s nuclear program and its acquisition of scientific knowledge about uranium enrichment that experts believe is irreversible.

In a research note on Wednesday, political risk consultancy Eurasia Group said that despite Iran’s readiness to resume talks in November, “a revival of the Iran nuclear agreement is unlikely next year, as Iran’s rapid nuclear buildup and maximalist demands will probably render irrelevant the 2015 agreement.”

It added that “the chances of reaching a compromise are very limited given the Iranian government’s hardline stances and internal divisions, as well as greater demands from the West for new restrictions in response to Iran’s nuclear progress.”

On this point, Malley said that all of the interlocutors he had met in recent weeks, “shared deep and growing concern about the pace and direction of Iran’s nuclear progress, particularly at a time when the U.S. has made clear that it is prepared to come back into compliance with the JCPOA.”

Iran, for its part, continues to insist that its nuclear program is peaceful and that it has no intention of building an atomic weapon.

Comments by Iran’s Foreign Minister Hossein Amirabdollahian on Wednesday further dampened expectations of an easy return to the nuclear agreement. He indicated that Tehran may not be prepared to pick up the talks from where they left off in June and repeated an Iranian demand for the release of its frozen assets in foreign banks worth billions of dollars.

The pessimism is a change in tone from earlier this year, when European powers, Russia, China and the EU all mediated indirect talks between Iran and the U.S. during six rounds of discussions in Vienna. Both sides made progress on a step-by-step plan that envisaged Iran reducing its nuclear program in return for U.S. sanctions relief.

A resumption of talks in November could coincide with a planned meeting of the Board of Governors of the International Atomic Energy Agency (IAEA), the U.N. nuclear watchdog in charge of monitoring Iran’s nuclear sites. The 35-member board has to decide whether to censure Tehran over its continued refusal to allow IAEA inspectors into certain nuclear sites in Iran. Iran may calculate that a return to talks in Vienna could forestall such a resolution.

Most recently, Iran turned away inspectors at the end of September despite an agreement between Tehran and IAEA Director-General Raphael Grossi over accessing its sites. The inspectors were trying to replace surveillance equipment at the Karaj centrifuge assembly facility that was the target of an alleged sabotage incident in June.

To date, it is still unclear whether IAEA inspectors have managed to access the Karaj site.

Source : Politico EU More   

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