The gas pipeline is still in operation, a section of the Opal distribution network is for sale.
(Photo: dpa)
Dusseldorf Regardless of the end of the Baltic Sea pipeline Nord Stream 2, at least for the time being, the sales process for a customer pipe of the sister pipeline Nord Stream 1 continues. According to financial sources, three bidders are in the second round of auctions for a 20 percent stake in the Baltic Sea Pipeline Link (Opal). The tube transports gas from Mecklenburg-Western Pomerania to southern Saxony.
Final offers are due in March, people familiar with the matter said. Opal could be valued at 1.5 to 1.75 billion euros in the deal, Uniper’s share at 300 to 350 million. Uniper could not initially be reached for comment.
Chancellor Olaf Scholz decided on Tuesday to put the commissioning of Nord Stream 2 on hold. The parallel Nord Stream 1 pipeline, which has been in operation since 2012, is not affected. The EU currently gets around a third of its gas requirements from Russia. In Germany, more than half of the natural gas comes from there.
Nord Stream 1 is one of the most important tubes. Efforts are being made to ship more liquefied natural gas (LNG), for example from the USA to Europe. However, according to energy experts, Russia will continue to play an important role in the EU’s energy supply for a long time to come.
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Within Europe there is a network of pipelines that distribute the gas arriving from Russia. Opal begins where Nord Stream 1 ends, in Lubmin near Greifswald. From the Opal terminus in Olbernhau, Saxony, there are two connections: one in the direction of West Germany via the Stegal, the other in the direction of the Czech Republic via the Gazelle.
The 472-kilometer pipeline is 80 percent owned by W & G Transport Holding, a joint venture between Wintershall and Gazprom. The remaining 20 percent still belong to Uniper. The stake is up for sale as the utility no longer considers it part of its core business. The major US bank Citi is organizing the auction.
“Gazprom Exposure” must be priced in
The auction of the opal share has not been canceled despite all the confusion about possible sanctions against Russia. Investments in Russia-related companies would have a harder time in this geopolitical environment, said people familiar with the auction. However, those interested were aware of the risk from the start.
Every bidder must agree to the “Gazprom exposure”, that is, to doing business with Gazprom. Many interested parties from North America therefore did not even take part in the auction. The Belgian gas transport company Fluxys and the Czech EP Infrastructure, operator of the Slovakian Eustream pipeline, have now advanced to the second round of the bidding process. Australian infrastructure investor First Sentier is also involved, people familiar with the matter said. The company is known in Germany as the former owner of the Ferngas Nordbayern pipeline. The bidders declined to comment.
Opal is currently still generating good returns based on an exemption that runs until 2031: Opal does not have to price gas transport according to the normal specifications. In every follow-up contract, lower earnings can be expected due to the regulation that will then take effect, according to financial circles. Investors would also have to reconsider the long-term prospects of gas pipelines in general. In a net-zero carbon scenario, the value of a gas pipeline is limited.
Although there are considerations to eventually replace natural gas with hydrogen produced with solar or wind energy. However, the place of the north-south axis Opal is unclear in such a scenario, as Russia has not yet pursued any major hydrogen plans. But Scandinavia could possibly become a supplier one day.
More: Uniper benefits from high energy prices – and fears for Nord Stream 2
