Russia’s Yamal-Europe Gas Pipeline Stuck in Reverse: Explainer

MOSCOW, Dec 27 (Reuters) – The Yamal-Europe pipeline, which normally transports Russian gas into Europe, has shifted into reverse over the last week, triggering a row between Moscow and its western neighbors.

Instead of flowing into European markets, which are facing a winter heating crisis due to sky-high prices, gas has been flowing east into Poland and Ukraine, in a development that Russia blames on speculation by German firms.

The following is an explanation of how the pipeline works.

VITAL STATISTICS

The Yamal-Europe pipeline is more than 2,000 kilometers (1,243 miles) long and brings gas from the gas-rich Yamal region in the Russian Arctic.

It passes through the city of Smolensk in western Russia, runs on through Minsk in Belarus and then travels across Poland before terminating at the Mallnow compressor station near Frankfurt an der Oder near the German-Polish border.

Construction of the pipeline began in 1994 and it reached annual designed capacity in 2006 of almost 33 billion cubic meters, or around one-sixth of Russian gas exports to Europe.

WHO OWNS IT?

The pipeline’s portion in Poland is owned by EuRoPol Gaz, a joint venture of Russian energy giant Gazprom and Poland’s PGNiG.

The German section of the gas pipeline is owned by WINGAS, a joint venture between Gazprom and oil and gas company Wintershall DEA. Wintershall, in turn, is co-owned by German chemicals group BASF and Russia’s LetterOne.

POLISH CONTRACT

A long-term gas transit contract between Russia and Poland expired in mid-May 2020. Since then, Gazprom has booked short-term transit capacity through the pipeline via auctions.

It has not booked capacity at daily actions since Dec. 19, when the pipeline has been operating in reverse mode.

During the recent reversal, companies with supply deals have said their contracts have been met.

IN REVERSE

The pipeline sometimes switches into reverse, when gas flows from Germany to Poland, which occurred in October too.

This reverse mode means there are no requests for gas towards Germany, which also receives Russian gas via the Nord Stream 1 pipeline on the bed of the Baltic Sea.

TRANSIT FEES

Russian oil and gas giant Gazprom ships gas to Germany at cheaper prices than to Poland to offset higher the transit fees involved in piping it for a longer distance.

However, this complicates gas sales as the European Union has allowed re-exports of gas which were previously banned by Gazprom. Gazprom agreed to drop the re-export clause in 2017 as part of an antimonopoly probe into its practices in Europe.

This effectively allows gas bought at a discount from Russia in Germany to be sold to buyers other countries at a profit.

In the past, Moscow repeatedly accused Ukraine of holding onto gas bound for Europe instead of allowing it to flow on, interrupting Russian exports, notably in winter 2008-2009.

Ukraine denied any wrongdoing.

Russian President Vladimir Putin said last week that Germany was reselling Russian gas to Poland and Ukraine rather than relieving an overheated market for the fuel.

Germany’s economy ministry declined to comment.

(Reporting by Vladimir Soldatkin; Editing by Alexander Smith)

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