EUGAL at gunpoint. The Nord Stream 2 branch can be expensive

EUGAL. Grafika: Gascade
EUGAL. Grafika: Gascade

Seven German politicians protesting against Nord Stream 2 seem few. However, this is the tip of the iceberg. The resistance blade in Germany is directed against the branch of the disputed gas pipeline, namely EUGAL, without which Nord Stream 2 will be a gas pipeline nowhere. It turns out that it can cost the German taxpayer a lot – says Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl.

Seven deputies to the Bundestag and the European Parliament appealed to the German government to block the Nord Stream 2 gas pipeline. Although their initiative coincides with the Polish position, it may not be effective due to the small scale. The blade of resistance to the Russian investment (Nord Stream 2 AG belongs one hundred percent to Gazprom) is directed somewhere else.

EUGAL is to be a gas pipeline discharging the raw material from the German coast, where it can end the Nord Stream 2 route, south to Deutschendorf on the Czech border. From there, gas from Russia can spread throughout Central and Eastern Europe, blocking market development, competition and undermining alternatives like the Northern Gateway. In Germany, however, these arguments are less convincing than the financial and environmental concerns associated with this investment. If they grow, they can also influence politicians, and the group of opponents of Nord Stream 2 and EUGAL may increase.

Financing on paper

Energate portal informs about the discussion about the EUGAL gas pipeline, which is to be the German branch of the contested Nord Stream 2. It turns out that a number of German entities have expressed reservations that attach to the fears reported earlier in Poland and beyond.

The planned EUGAL gas pipeline will not increase transmission charges in Germany, according to the GASCADE investor. The discussion on this subject took place during the workshop of the German association of transmission operators FNB Gas as part of the consultation of the Network Development Plan for 2018-2028, to which EUGAL was entered, which was reported by BiznesAlert.pl. The Nord Stream 2 branch dominates the discussion.

In August 2017, the Federal Network Agency (Bundesnetzagentur – BnetzA) deleted EUGAL from the framework plan, arguing that the investment was uncertain in the unknown fate of the gas source, the contested Nord Stream 2 gas pipeline. However, this did not affect the plan, because BnetzA’s remark was auxiliary. EUGAL was ultimately included in the ten-year plan and was submitted to market players in January this year. Although some of the media expressed their opinion that the investment is sealed, the conclusions of the FNB Gas meeting say the opposite.

Of the seven billion euros foreseen for investments during this period, EUGAL is to absorb as much as 2,9 billion. Other expenses will be spent on converting the network from low calorific gas to high-caloric and new warehouses. One of the participants in the meeting of operators joked that it is difficult to justify why one of the ten projects is to absorb the three seventh funds allocated for the development of the network.

This would suggest that all users of the gas pipeline will pay for this in a high tariff. The previous perspective of 2016-2026 assumed only less than EUR 4 billion in expenditure. The increase by almost half results from the inclusion in the EUGAL plan, which aroused the concerns of the discussion participants. Despite the participants’ concerns about the possibility of high tariffs, GASCADE argues that the long-term capacity reservation on the PRISMA platform remained at 51 billion from 55 billion cubic meters bus power is enough to cover the investment costs. However, it is difficult to believe the company. Such significant expenses have to be compensated and tariffs will be the basic tool for achieving this goal.

By the way, the contested Nord Stream 2 also has a capacity of 55 billion cubic meters per year. According to GASCADE, the tariff on EUGAL is 2,4-2,5 EUR/kWh/h/a. This is to be less than the potential single fee on the GASPOOL market. However, if EUGAL does not arise, operators will only pay for planning costs. One of the participants questioned the possibility of completing this project on time, ie until the end of 2019, precisely because of high costs.

Out of the six entities involved in the discussion, five criticized EUGAL. BnetzA assessed that it is still not decided whether EUGAL will be established. According to the BnetzA representative present at the meeting, the case is open. In his opinion, it is still necessary to decide whether long-term capacity reservation EUGAL is a sufficient basis for financing the construction of a branch. It is also not known whether or not Nord Stream will be created. 2. This suggests that BnetzA may once again remove EUGAL from the Network Development Plan.

– This is drafting a sheet – one of the meeting participants joked. This was confirmed by the representative of GASCADE, who said that if Nord Stream 2 is not created, EUGAL will be deleted from the next Network Development Plan. It is worth recalling that Germany is planning an LNG terminal in Brunsbuttel for 5 billion cubic meters annually, which may also affect the parameters of the Nord Stream 2 branch. The fate of the Russian gas pipeline is therefore not a foregone conclusion. This laconic GASCADE response will not change this.

The Germans are worried about the environment

The inhabitants of Brandenburg are also against EUGAL. Local newspapers describe the resistance of the inhabitants of Gramzow. They are afraid of damages to agricultural areas that occurred during the construction of the Nord Stream 1 branch, the OPAL gas pipeline. They even talk about the threat of an explosion or a terrorist attack. Local government Gramzow announces a discussion about fire protection measures. The hybrids further emphasize that the storage of pipes has already started on their territory, although the administrative procedure has not yet been completed. In their opinion, this is a disregard for procedures.

Other concerns are reported by the Klipphausen municipality. On January 11 this year, the municipal council decided to raise objections to EUGAL. Citizens protest against construction because they are afraid of its negative impact on industrial areas. It is not known, however, whether this objection will be taken into account by Brandenburg. Some of the politicians of the city of Olbernhau are also against the gas pipeline. The route is to pass through the wind farm in Saidenberg. The Christian Democrats warn of the catastrophic consequences of investment. The position of the city council was significant due to its participation in the proceedings regarding spatial planning in the area. Perhaps the resistance of the city will force GASCADE to revise the route for a section that omits the farm.

EUGAL opponents also raise other reservations. They are afraid of negative consequences for flood protection plans, forest fires, negative impact on the Cedynia Landscape Park in the Odra bend, damage to rare species of amphibians and reptiles, damage to archaeological resources and disturbances in farming. For the same reason, the authorities of the Zachodniopomorskie Voivodship reported concerns about the cross-border impact of investments, as described in BiznesAlert.pl.

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