Exclusive - EU to lift cap on Gazprom's use of Nord Stream pipeline link, sources say

By Alissa de Carbonnel

BRUSSELS (Reuters) - The European Commission will lift a cap on Friday that curtails Gazprom's use of its Nord Stream pipeline link with Germany, European Union sources said, removing a hurdle for Russia's plan to double the pipeline and bypass Ukraine as a gas transit route.

Together with a separate move to settle an antitrust case against Gazprom, the resolution of key disputes with Moscow angers some EU nations who want a tougher stance towards Russia over its military engagement in Ukraine and Syria.

Friday's decision on Opal, which provides a land link from Russia's undersea Nord Stream pipeline to Germany and the Czech Republic, allows Gazprom (GAZP.MM) to reroute more of its gas supplies now going through Ukraine to Europe.

Under the exemption from EU competition law, Russia's state gas exporter will retain access to 50 percent of the pipeline. But it will gain the right to bid at auction to pump more gas via another 30 to 40 percent, sources said.

At least 10 percent and as much as 20 percent of Opal must be available to other suppliers in case of demand, they said.

Since its completion in 2011, Gazprom has only been allowed to use 50 percent of Opal's 36 billion cubic meters of annual capacity, under an EU ruling to prevent energy suppliers from dominating infrastructure.

In giving ground on Opal, the Commission is seeking guarantees Gazprom will retain transit through Ukraine after it contract expires in 2019, an EU source said. It also wants three-way talks with Kiev over winter transits, the source said.

European energy chief Maros Sefcovic said on Thursday he was "making a maximum effort" to broker a deal between Russia and Ukraine to ensure uninterrupted gas supplies for Ukraine this winter.

"So far we haven't been successful, but I plan to meet with the Russia partner soon," Sefcovic told Reuters.

Striking a conciliatory tone, President Vladimir Putin said on Thursday Russia was ready to resume gas supplies to Ukraine at "any second" if Kiev agreed to pre-pay for supplies.

NORD STREAM 2

Clearing Opal's legal limbo is key to plans by Gazprom, which supplies around a third of the EU's gas, to expand the pipeline in a 9.9 billion-euro project known as Nord Stream 2.

With Russia's gas routes to Europe increasingly politicised since its annexation of Crimea from Ukraine in 2014, many eastern European countries and the United States have opposed the project.

They argued it would undermine Ukraine's efforts to reform its economy by sidelining it as a transit route, depriving Kiev of billions of dollars in transit fees.

Before Friday's decision, the Polish state-owned gas company PGNiG (PGN.WA) threatened to sue the Commission over the Opal decision, saying it threatened energy security.

The decision will be applicable until 2033 and be binding on Germany's energy regulator, the Bundesnetzagentur. It modifies an exemption proposed by Germany in May that would have allowed Gazprom full access to the pipeline.

"We are taking a cautionary approach. We are not trading in a void or inflicting ourselves a wound when we could be taking a stronger stance on Russia," an EU source said.

EU approval of Nord Stream 2 is still in doubt, the source said.

Gazprom's partners in the Nord Stream-2 project are Uniper , Wintershall (BASFn.DE), Shell (RDSa.L), OMV (OMVV.VI) and Engie (ENGIE.PA).

But the company has said it will consider cancelling the agreement with European partners after Poland's anti-monopoly watchdog objected to the consortium which was to finance, build and operate the new pipeline.

(Additional reporting by Tatiana Jancarikova in Bratislava, editing by Larry King)