FRANKFURT: Russia's Gazprom must immediately cut around half the gas deliveries it makes via the Opal gas pipeline that is controlled by a joint venture of Gazprom and Wintershall DEA, Germany's Bundesnetzagentur network regulator said.

Russia's state-controlled gas giant Gazprom is building new pipelines as it tries to bypass Ukraine, which remains its key gas transit route to Europe despite past rows about prices.

Gazprom supplies around a third of Europe's gas needs, but exports via Ukraine were temporarily suspended on separate occasions in the past over pricing spats between Moscow and Kiev.

Some European countries support alternative routes to deliver Russian gas and some have begun importing gas from destinations other than Russia, including in the form of liquefied natural gas (LNG).

On Tuesday Europe's top court had overruled an EU decision allowing Gazprom to ship more gas via the pipeline, meaning that Gazprom has to redirect some of its gas flows through other destinations.

"If necessary the Bundesnetzagentur will carry out supervisory measures to ensure this," a spokesman for the regulator said.

Gazprom had no immediate comment on Wednesday. The Russian gas giant said on Tuesday it was studying the legal and commercial consequences of the decision.

Oliver Sanderson, head of European gas market analysis at Refinitiv, said a possible reduction in gas flows through the Opal pipeline would have an impact on the market.

"The risk of disruption is already causing market players to close short positions or take hedges that have pushed up prices," he said.

If the gas flows through the Opal pipeline can be replaced, they would have to travel via Ukraine, Sanderson added.

Representatives of Russia, Ukraine and the European Union are set to meet on Sept. 19 for talks on Russian gas supplies to Ukraine.

The Russia-Ukraine gas transit agreement is due to expire at the end of the year.

Transit fees significantly contribute to Ukraine's budget. The ex-Soviet republic continues to have strained relations with Russia over Moscow's 2014 annexation of Crimea and its support for pro-Russian separatists in the country's east.

Russia is eager to strike a short-term deal with Kiev on gas transit to Europe when the current agreement expires in a bid to buy time to complete pipelines that will bypass Ukraine, sources have told Reuters.

Opal is 80%-owned by a WIGA, a joint venture of Gazprom and Wintershall DEA, while the rest is owned by a subsidiary of German utility Uniper.

 

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