Gas Transmission Operator of Ukraine, the country's natural gas network, cranked up the pressure on its Slovakian counterpart Eustream in a July 8 statement, claiming that differing and non-EU compliant capacity sales methods employed by its neighbor are adversely affecting demand for its own transport, making it "less attractive for traders."
Set against a backdrop of an ongoing maintenance dispute between the two networks, GTSOU once again voiced its grievances in public, but this time chose to criticize Slovakia for its lack of compliance to the European Commission's Capacity Allocation Mechanism Network Code, currently in the process of application in Ukraine as it strengthens its ties to Europe's Energy Community as a "third country" member.
Commenting on its first successful annual capacity sales under CAM NC on July 6, GTSOU said that: "[The] Slovak TSO has not yet informed the market what capacity amount is planned to be offered."
"This situation makes import capacity at this interconnection point less attractive for traders, because they cannot plan a stable mode of operation and, accordingly, buy less capacity from the Ukrainian side of the interconnection point," it added.
"This underscores once again the importance of implementing European business rules in neighboring EU countries at all interconnection points with Ukraine and synchronizing capacity allocation mechanisms with related TSOs."
In the statement, GTSOU lauded the successes of capacity sales for exit capacity at the Moldovan border -- essentially a landlocked market in gas terms, and previously entirely dependent on Russian transport -- as well as import capacity from Slovakia at the Budince interconnection point, adding that the auctions were attended by five network users.
Slovakian TSO EU Stream did not conduct auctions for Ukrainian bordered capacity on July 6. It currently sells such capacity on a first come, first served basis, which GTSOU previously criticized for being "non-transparent," and "not in the spirit of Europe's Energy Union."
Auctions for annual interruptible capacity will take place on July 20, and will provide another opportunity for shippers to secure annual contracts spanning the forthcoming gas year between October 2020-September 2021. Monthly contracts will also be offered on this day, as prescribed by CAM NC auction timetables.
EC 2017/459
The CAM NC regulation is mandatory for all EU member states. Deadlines for its application by member states have now all passed, as per Article 38 of EC 2017/459.
The regulation document opens by saying: "Competition in natural gas markets... requires a transparent and non-discriminatory access to gas infrastructure for all network users. However, in large parts of the Union the lack of equal and transparent access to transmission capacity remains a major obstacle for achieving effective competition on the wholesale market. Furthermore, the fact that national rules differ from one Member State to another hampers the creation of a well-functioning internal market for gas."
"Inefficient use of and limited access to the Union's high-pressure gas pipelines lead to suboptimal market conditions. A more transparent, efficient and non-discriminatory system of allocation of scarce transmission capacities needs to be implemented for the Union's gas transmission systems, so that cross-border competition can further develop and market integration can progress. Developing such rules has been consistently supported by stakeholders."
"This Regulation should be without prejudice to application of Union and national competition rules, in particular the prohibitions of restrictive agreements (Article 101 of the Treaty on the Functioning of the European Union) and of abuse of a dominant position (Article 102 of the Treaty on the Functioning of the European Union). The capacity allocation mechanisms put in place should be designed in such a way as to avoid foreclosure of downstream supply markets."
It also states that its purpose is "to ensure the implementation without detrimental effect on the revenues and cash flow positions of transmission system operators."
Article 2
Eustream has previously said that its mechanism for capacity sales "is not recognized by our [country's] regulation." Slovakia's energy regulator confirmed to S&P Global Platts that "we duly apply the CAM NC on interconnection points with EU members, we have until this moment not chosen to apply it at the border with Ukraine."
This stance of optionality is reinforced by Article 2 of CAM NC: "This Regulation shall apply to interconnection points... it may also apply to entry points from and exit points to third countries, subject to the decision of the relevant national regulatory authority."
The ongoing maintenance dispute between GTSOU and Eustream centers around planned works which are scheduled to commence on the Ukrainian side from August 11, and could entail a full interruption until October 1.
In the event this takes place, CAM NC exempted capacity contracts sold on the Slovakian side would be fully interrupted without compensation, as per Eustream's Operational Order. GTSOU has previously argued that Eustream should "find a solution within European rules," although its own efforts to transfer maintenance-affected capacity from Budince to Velke Kapusany is not prescribed within CAM NC.
"In case of interruption or restriction of transmission, network users shall have no damage claims, unless the damage was caused by fault of the Transmission System Operator," Eustream's Operational Order states.
