European consumers may face a new spike in the spot price of natural gas following a Court of Justice of the European Union ruling confirming the revocation of a 2016 exemption by the European Commission to German pipeline operator Opal to transport Russian gas at full capacity.

The ruling on Thursday has been long overdue as Poland, Lithuania and Latvia — joined by Poland’s oil and gas producer PGNiG — had contested the exemption for five years, arguing it was passed without proper examination of its potential impact on these countries and the European principle of energy solidarity.

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The Court of Justice’s ruling is final, PGNiG said, as the German government had already appealed an earlier, similar court decision to annul the exemption in 2019.

That appeal contested the initial decision of the General Court of the European Union in Luxembourg.

The General Court had agreed with Polish arguments, and resolved that the EC's decision to exclude Opal from the scope of European gas market regulations had violated the principle of European energy solidarity.

These regulations, commonly known as Third Energy Package, state that in the event a gas producer is also an owner of a pipeline in Europe, it can only use 50% of throughput capacity of that pipeline, with the other half to be allocated to third-party shippers.

Opal, which is jointly owned by Russian gas monopoly Gazprom and Germany’s Wintershall Dea, serves as the onshore extension of the Gazprom-led Nord Stream subsea gas pipeline that delivers up to 55 billion cubic metres of Russian gas to Germany annually across the Baltic Sea.

Opal said it was not a party in the appeal proceedings in the Court of Justice so it has “noted with regret the judgment of 15 July”.

Gazprom currently delivers no gas to Germany via Nord Stream as volumes via the subsea pipeline from Russia have been halted for maintenance from 13 to 23 July.

With the ruling in place, Gazprom might have to ultimately reduce volumes delivered via Nord Stream to Germany by half, to an estimated 75 million cubic metres per day.

PGNiG expectations

PGNiG told Upstream that Nord Stream has other options besides Opal to take gas from Nord Stream to European customers via two other pipelines in Germany, Eugal and Nel.

It thus expects the ruling to affect Gazprom's gas supplies in long term, as the capacity of these three onshore pipelines will not be sufficient to allow existing Nord Stream and upcoming Nord Stream 2 to operate at full capacity.

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“From the standpoint of Opal, it is now up to the European Commission and the responsible national regulator [in Germany] to become active and rapidly bring the Opal settlement agreement to a successful conclusion”, Opal added.

European gas prices have remained at unusually high levels this summer as a result of the recovery in demand and the low level of gas in underground storage that has to be replenished ahead of winter.

Gazprom has remained deaf to calls from European customers to increase gas deliveries to the continent via Ukraine, which has significant unused transit capacity to Europe.

Some analysts in Moscow suggested the monopoly has not fully recovered its production capacity after challenges it faced last year because of the Covid-19 pandemic.