According to Vedomosti, the European Commission (EC) decided not to exclude Nord Stream's pipeline, Opal, from the Third Energy Package at its meeting on 10 March. This will prevent utilisation of the pipeline capacity at 100% capacity. Nord Stream is 51% controlled by Gazprom, while Wintershall Holding and E.On Ruhrgas own 15.5%. Gasunie and GdF Suez own 9% each in the consortium.
Our View: While we do not think that the market expected Gazprom to see some exemption from the Third Energy Package regulation, we still treat the news as negative for the Russian gas monopoly. We remind investors that Opal (36bcm of total capacity) and Nel (20bcm) are the onshore continuation of the offshore Nord Stream pipeline. The EC decision means that the consortium will only be allowed to use Opal at 50% of capacity, thus limiting Gazprom's ability to fill the main Nord Stream pipeline with gas in full (and undermining the project's profitability).
We forecast Gazprom to transport 36bcm of gas via Nord Stream this year, so do not see any risk to our near-term forecasts. We note that the company has quite extensive gas export capacities as it is, so we do not envisage any dangers here either. However, the inability to use Nord Stream at full capacity coupled with the problems implementing South Stream might be negatively perceived by the markets.