Ukraine’s GTSOU, Naftogaz to be included in Nord Stream 2 certification process

Aura Sabadus

15-Nov-2021

LONDON (ICIS)–The Ukrainian gas incumbent Naftogaz and the transmission system operator GTSOU have welcomed a decision by the German energy regulator Bundesnetzagentur (BNetzA) to include them in the certification of the Nord Stream 2 pipeline.

“At GTSOU, we continue to resolutely object to any gas pipeline project that threatens our country’s national security, seeks to sidestep EU law, or weakens Europe’s energy architecture,” Sergiy Makogon, CEO of GTSOU said in a 15 November statement to the press.

“The Ukrainian people are the GTSOU’s ultimate shareholders, and it is our duty to defend our country’s interests. When we learned that Nord Stream 2 AG had applied for certification as an independent gas transmission operator, we could not stand idly by, and we knew that it was our responsibility to intervene in this process with BNetzA, to state our earnest objections, and to present our legal arguments,”

GTSOU pointed out that BNetzA had acknowledged the Ukrainian TSO’s “special understanding of the effects that different uses of the various transit routes from Russia may have.”

Ukraine’s Naftogaz is the company which is responsible for organising the gas transit on behalf of Russia’s Gazprom.

Naftogaz CEO Yuriy Vitrenko added: “We welcome BNetzA’s decision to accept Naftogaz’s petition to intervene in the certification of the Nord Stream 2 operator. We have significant legal and commercial interests in the European gas market and are encouraged by the fact that BNetzA is willing to examine the issue from different angles.”

“Our view remains: the Nord Stream 2 pipeline operator cannot be certified unless it complies with all requirements of EU competition and energy law. There can be no special treatment for Gazprom,” Vitrenko said.

Naftogaz and GTSOU have been pushing to be involved in the certification of Nord Stream 2 amid concerns the Russian-spearheaded pipeline would not comply with EU rules.

They argued that the German watchdog was under legal obligation to accept the application because the commissioning of Nord Stream 2 would harm Ukraine’s economic interest.

If the existing transit is rerouted away from Ukraine to Nord Stream 2, Ukraine would not only lose significant annual revenue but would also have to decommission large sections of the transmission infrastructure. Keeping the large transmission system in place without actually having sufficient transit gas would incur Ukraine hefty costs, which would ultimately have to be borne by local consumers.

The regulatory certification of NordStream2 AG began on 8 September, when its application was accepted by BNetzA. The agency has four months until 8 January, 2022, to reach a draft decision on the NS2AG certification.

The European Commission has between two and four months to review the German decision and make its recommendations which BNetzA.

As part of the certification process, Naftogaz and GTSOU will now have access to regulatory information submitted by the Nord Stream 2, and can review the Nord Stream 2 claims on security of supply, unbundling, third party access and competitive tariff formation.

This may have an impact on the overall regulatory timeline if the Ukrainian companies raise serious objections but it was unclear whether there would be any material delay at this point.

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