Polish Briefing 23 May, 2018 9:00 am   
Editorial staff

Polish Briefing: Gas prices in Europe at the mercy of Russia thanks to Nord Stream 2

What goes on in Poland on the 23rd of May.

The European Commission warns: Gas prices in Europe will be at the mercy of Russia thanks to Nord Stream 2

The European Commission has published a study showing that the impact of the contested Nord Stream 2 project on the gas market in the European Union will depend on Russia’s decision on how it will consequently use Ukraine’s pipelines in the future.

The Commission published a fatal report on the impact of regulation in the EU gas sector on the quality of the European Union’s social policy. The document contains references to the disputed Nord Stream 2. It is to be ready by the end of 2019 and, according to the Moscow declaration, and will lead to a reduction of supplies through Ukraine. According to the Commission, this will be important for the future of the gas market in Europe, and the scale of influence will depend on Russia’s decision on how much gas to leave in the gas pipelines stretching across the country of Bohdan Khmelnytsky.

The Commission also recognizes the possibility that the Russians will completely give up the Ukrainian route to Germany. – The most striking aspect of the market sensitivity scenarios for Nord Stream 2 is the doubling of the price difference in the internal gas market in the European Union – we read in the document.

– Redirecting the contract volume from Ukraine to Nord Stream 2 and drastic reduction of sales through this country will create a significant infrastructure depletion and related price differential between North-Western Europe and Central and Eastern Europe.

This means that the difference in the price of gas between these regions will be increased by Nord Stream 2, and the scale of change will depend on Russia. – Stopping Nord Stream 2 is in a much broader interest than only Ukraine – says Naftogaz, commenting on the results of the research.

Ukraine can make a deal on Nord Stream 2

Germany wants to talk with Russia and Ukraine about the conditions for maintaining the minimum gas supply despite the construction of the contested Nord Stream 2. According to the European Commission, the Ukrainian side is ready to agree and offers rebate transfer prices through its territory.

Vice-President of the European Commission for Energy Union Maroš Šefčovič informed journalists on the sidelines of the Globsec conference in Bratislava that Naftogaz Ukraine may offer Gazprom a reduction in transmission tariffs in exchange for the Russian giant to keep part of the transit through Ukraine. The Russians intend to minimize supplies through Ukraine in favor of the disputed Nord Stream 2 gas pipeline, which from the end of 2019 is to serve supplies through the German route.

– Ukraine claims that they want to keep supplies of Russian gas through its territory to Europe and will look for solutions that will guarantee a higher volume of supplies cheaper for Gazprom – said Šefčovič.

Meanwhile, the foreign minister of Russia argues that Germany is still supporting the construction of Nord Stream 2. Although German Chancellor Angela Merkel admitted that this investment also has a political dimension and should not be implemented without a guarantee of a minimum transit through Ukraine, and also did not comment on this topic During a press conference with President Vladimir Putin in Sochi, according to Lavrov, her country insists on implementing the undertaking.