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PGNiG files against European Commission's decision

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World Pipelines,

On 4 December, PGNiG Supply & Trading GmbH filed complaint against a decision made by the European Commission to the European Court of Justice. The European Commission decided to exempt the OPAL gas pipeline from the obligation to apply the third-party access principle.

The company has also submitted a motion for relief to suspend the effects of the decision issued by the Commission. However, this is the first of several legal measures that PGNiG intends to take against the European Commission and the Bundesnetzagentur (Germany’s energy market regulator).

"The decisions and the mode of proceedings by the European Commission and the Bundesnetzagentur are without precedence. They are destroying the development of the competitive gas market and expanding the privileges enjoyed by Gazprom, which can in turn lead to the Russian company acquiring a monopoly in the supply of gas to Central and Eastern Europe. This is a serious threat to the security of gas deliveries to Poland and the entire region,” stated Piotr Wozniak, PGNiG SA’s CEO.

In October, PGNiG SA declared that it would file a complaint against the European Commission’s decision and Bundesnetzagentur in the Court of Justice of the European Union and German national courts.

Before taking the necessary legal steps, PGNiG SA appealed to the European Commission to publish the decision on the OPAL gas pipeline taken on 28 October 2016.

However, the Commission has yet to publicly disclose the content of that decision. The Bundesnetzagentur also failed to respond to the application made by PGNiG SA for access to the decision as a matter of public record.

As a result, for over a month, no other market participants other than Gazprom have had the opportunity to read the Commission’s decision, which is of fundamental significance in the deterioration of conditions for competition on the gas market and the impact on the security of gas supplies to Central and Eastern Europe.

The Bundesnetzagentur has also decided to implement the European Commission’s decision. On 28 November, the Bundesnetzagentur signed a contract with Gazprom, Gazprom Export and OPAL Gastransport GmbH, exempting the owners of the OPAL gas pipeline from the obligation to apply in full EU regulations on third-party access. This contract enters into force on 31 December.

Both PGNiG SA and NAFTOHAZ Ukraine demanded the performance of the contract outlined above. However, neither PGNiG SA nor NAFTOHAZ Ukraine have received a positive response to their requests from the Bundesnetzagentur.

In the opinion of the law offices representing PGNiG SA and PGNiG Supply & Trading, the mode and manner of proceedings in this matter by the Bundesnetzagentur are unprecedented and constitute a violation of German law.

Arguably, PGNiG SA, PGNiG Supply & Trading and other entities operating on the German market have been deprived of the right to defend their own interests as they are entitled to do under the German constitution and other legal acts.

On 1 December, the board of directors of PGNiG SA decided to submit an appeal against the decision of the European Commission to the Court of Justice of the European Union. On 4 December, an action was brought to the Court by PGNiG Supply & Trading GmbH. The company has filed an urgent application for relief to the Court in the hope of suspending the performance of the Commissions’ decision by 23 December. Approval of the motion will automatically lead to suspension of the contract between the Bundesnetzagentur, OPAL, Gazprom and Gazprom Export.

In its complaint to the Court of Justice of the European Union, PGNiG Supply & Trading GmbH lodged 14 charges in conjunction with the European Commission breaking the Treaty on European Union, the Treaty on the Functioning of the European Union and Directive 2009/73/EC of the European Parliament and of the Council concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC.

This is the first in a series of carefully-planned legal steps under EU and German law that will be taken by the PGNiG Group.

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