Russian Germany (Germany): tube banned solo

With a poor pipeline in the world, “Nord stream — 2”, is facing another painful blow. The Federal network Agency of Germany last week definitively rejected the application of company Nord Stream AG 2 about the liberation of the Baltic gas pipeline from the EU regulation.

From the decision of the regulator it is clear that Nord Stream 2 does not meet the requirements of the German regulation on exemption from regulation, by reason of its incompleteness.

The company 2 the Nord Stream AG, a wholly owned Gazprom, has applied for exemption of the pipeline from the EU-regulation in early 2020. The exception generally applies to the pipeline whose construction was already completed in may 2019.

Although Nord Stream 2 has not yet been completed in may of last year, Nord Stream AG 2 argued that the deadline should not be interpreted narrowly. According to Nord Stream AG 2, it is not enough to consider the completion of the works solely in the structural and technical sense. On the contrary, should be taken into account, claimed in Moscow that by the time of the entry into force of the new Directive on the internal gas market was already invested billions.

But the Federal network Agency rejected this argument. The interested party was granted time till may 8 to bring new effective arguments. And that was followed by a final decision.

The German energy market regulator ruled that “Nord stream — 2” must comply with European competition rules: the gas supplier (Gazprom) cannot be simultaneously the owner of the pipe.

In practice, this means that even if the pipeline will be completed by the end of 2020, half of its capacity is 27.5 billion cubic meters a year from 55 billion, the Russian gas monopoly will have to pay independent providers. To fulfill the requirements of Gazprom is not able: only its field connected to the “Nord stream — 2”, and in addition, no Russian company has the right to export. Thus, the pipe rested not in the wall, which at least in theory, you can carry, and into the void created by its owners. And the emptiness, as you know Pelevin, insurmountable.

However, this is not the only telling blow at the monopoly of Gazprom in may. Last week ended the period of validity Russian-the Polish agreement on gas transit from Russia to the West along the Polish section of the gas pipeline “Yamal — Europe”.

As informed on its official website, the operator of the gas transport network of the Polish company Gaz System and a historical contract has ceased to operate last Sunday at exactly 08:00 in the morning local time. The Polish government refused to conduct any negotiations on a contract extension.

“Yamal — Europe” — transnational export gas pipeline, introduced in 1999, worked for 20 years according to the rules of the Kremlin, but now he will have to listen to Europe. First day of work at the new rules brought the collapse of the supply by almost two times, according to the data of Gaz System. May in Poland entered into force the new Network code, which already incorporated the increase in tariff. The main purpose of the new rules is to increase the incomes from transit, explained earlier Gaz System.

Increased fees for transit will hit the budget of Gazprom, which is already bursting at the seams due to the sharp fall in gas prices. In April, the spot market gas quotes in Europe fell to $ 60 per thousand cubic meters. This is lower than, for example, in the Leningrad region ($63). Contracts for the supply of gas at the end of the current week fell even lower to $ 52 per thousand cubic meters.

Spot gas prices on the European market for almost a month are below domestic. Moreover, the current prices significantly below the point of profitability of Gazprom, which only taxes and transportation of each thousand cubic meters of fuel “eat” at least $ 63, says Interfax.

The situation on the gas market “remains catastrophic,” write analysts at PSB. “Against the backdrop of weak demand and filled storage recovery in the pricing environment is expected not earlier than next year”, — experts warn.

According to own forecast of Gazprom, this year’s gas sales to Europe will fall by 17% to 165 billion cubic meters, and the average price will crash by a third to 133 dollars. Thus Gazprom could lose up to $ 20 billion in export earnings, estimates Raiffeisenbank. And that’s a very good script.

The losses will hit the company’s budget, which is loaded with a multi-billion megastrike and last year received a cash gap of 190 billion rubles. In 2020, Gazprom will have to borrow up to $ 10 billion to balance the negative cash flow, predicts Fitch ratings.

It’s obvious that the “fat years” for the Russian hydrocarbon monopolies left behind. In modern times, they have to learn to play by the rules of the buyer. Or to concede the market for Qatari LNG and us shale oil. Time frightening the victorious marches of the Russian tubes were left in a bygone era.