FSUOGM: Sechin pushes for access to European gas market

Russia’s most influential oilman Igor Sechin, head of state oil group Rosneft, is once again pushing the government to allow the company to export gas by pipeline, in spite of Gazprom’s monopoly over these supplies, Kommersant reported on August 27.

Rosneft, though mainly focused on oil, has been working for years to build up its natural gas business, to provide a hedge against oil market volatility. But it has had difficulty advancing new projects as domestic gas prices offer a low return. In a major breakthrough, though, the company finally brought on stream the next phase of its ambitious Rospan development in Western Siberia earlier this year, and will soon have some supply spare.

Sechin and his company have long coveted Gazprom’s role as Europe’s biggest gas supplier. But despite years of lobbying efforts, he has failed to convince the government to liberalise pipe gas exports. Moscow fears that doing so would mean Russian domestic gas competing with Russian gas in foreign markets, potentially driving down revenues.

However, Sechin’s latest effort comes after a German court denied Gazprom’s nearly complete Nord Stream 2 gas pipeline to Germany an exemption from EU energy market rules. This could mean that the Gazprom has to offer some of Nord Stream 2’s capacity to other Russian suppliers, even though Russian law at this stage makes that impossible.

The ruling could mean Gazprom has to unbundle the pipeline or even limit how much gas it sends through it. But while a setback, the decision will not prevent Nord Stream 2’s imminent completion.

The EU introduced an amendment to its gas directive in May 2019 to extend the bloc’s market liberalisation rules to pipelines to and from third countries such as Nord Stream 2. It was up to the discretion of EU member states connected to those pipelines, in this case Germany, to apply the rules. And German regulator Bundesnetzagentur in May last year chose not to grant the Russian pipeline an exemption.

Gazprom challenged this ruling in the Duesseldorf Higher Regional Court last year but was unsuccessful. It then took the matter to an appeals court in Duesseldorf, but that court has now rejected its appeal.

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