Yamal-Europe Halts Gas Flows
The Yamal-Europe gas pipeline that normally pumps gas from western Siberia into central Europe halted flows at the Polish-German border on May 26, according to data published by German grid operator Gascade. This development comes after Poland and Russia's long-term agreement on gas transit expired on May 17.
The Yamal-Europe line runs for 2,000 km from Russia's Tver region through Belarus and Poland, terminating at the German border, where it connects with other pipelines. Since 1993, a contract between Warsaw and Moscow has governed the transit of Russian gas through Yamal-Europe's Polish section. But the pair were unable to renew this agreement because of EU rules that require operators to auction off network capacity, preventing companies from having exclusive access. Gazprom is the monopoly Russian gas pipeline exporter.
These rules allow for legacy contracts like the one between Poland and Russia to continue, but prevent their renewal. Polish gas grid operator Gaz-System confirmed on May 15 it would start auctioning off Yamal Europe's capacity in Poland as per EU requirements once the contract had ended.
According to Gascade data, gas supplies from Poland to Germany at the Mallnow bordering crossing more than halved from 23.83 GWh during 05:00-06:00 on May 23 to 10.68 GWh the following hour. Supplies continued falling, dipping below 0.5 GWh/yr at midday on May 24. They ceased completely at 07:00-08:00 on May 26.
Between 11:00-12:00 on May 26, gas even began flowing in the opposition direction, peaking at around 2.24 GWh/h that afternoon before dropping to zero at 23:00-0:00. At the time of writing, the pipeline is not flowing in either direction.
In its statement, Gaz-System said capacity between May 18 and June 1 would be offered in daily auctions, while the entire capacity between June 1 and July 1 was offered in a single contest on May 18.
An auction was held on May 4 for capacity between July 1 and October 1, in which 31 GWh/h was booked – equal to 80% of the capacity available now that the Russian contract has expired. The remaining capacity in that period will be offered on a monthly basis in auctions on June 15, July 20 and August 17. Any leftover capacity will be awarded as daily or midday products.
Finally, all available capacity for the gas year starting on October 1 2020 and subsequent years will be offered as an annual product during an auction on July 6.
Yamal-Europe has a design capacity of just under 33bn m3/yr and is owned by EuRoPol GAZ, a joint venture between Russia's Gazprom and Poland's PGNiG, although it is operated by Gaz-System. In a research note on May 26, VTB Bank attributed the sharp decline in flows after the transit contract's expiry to weak gas demand in Europe, following the warm weather, high storage levels and the impact of the Covid-19 pandemic.
Russian transit via Ukraine has also fallen this year, dropping 46% year on year in April to 3.8bn m3, according to Ukrainian grid operator GTSOU. Gazprom has a ship-or-pay transit deal with Ukraine, meaning it will pay to send 65bn m3/yr of gas through the territory regardless of whether it pumps that much.
Gazprom also delivers gas to its European customers via the Nord Stream pipeline to Germany and the TurkStream and Blue Streams to Turkey.