Germany puts brake on Nord Stream 2's plans to supply gas to Europe

[November 16, 2021]  By Vera Eckert

FRANKFURT (Reuters) -Germany's energy regulator has suspended the approval process for a major new pipeline bringing Russian gas into Europe and agreed to hear Ukraine's concerns over the project, raising the stakes in a geopolitical tug of war with Moscow.

Nord Stream 2 pipeline has faced opposition from the United States and some European states, which say it will make Europe too reliant on Russian gas.

But with gas prices already sky high and jumping 9% on the regulator's move, alongside the threat of power outages https://www.reuters.com/business/
energy
/trafigura-ceo-weir-sees-very-very-tight-oil-market-2021-11-16 this winter due to low supplies, European governments face growing pressure to act.

The German regulator, the Bundesnetzagentur, said on Tuesday it had suspended the certification process because the Swiss-based consortium behind Nord Stream 2 needed to form a company under German law to secure an operating licence.
 

The regulator said it would only assess an application after a transfer of major assets and budgets for staffing to a German subsidiary.

"A certification for the operation of Nord Stream 2 will only be considered once the operator is organised in a legal shape compliant with German law," it said.

Once these preconditions had been met, the regulator said it could continue assessing the submission in the rest of the four-month application period that runs to early January.

Nord Stream 2 said it had been notified by the regulator. "We are not in a position to comment on the details of the procedure, its possible duration and impacts on the timing of the start of the pipeline operations," it said in a statement.

The Kremlin was not immediately available to comment.

The regulator said the Swiss company had decided not to turn itself into a German company but had set up a subsidiary under German law to deal with the section of the pipeline on German territory.

European and British wholesale gas prices have spiked in recent weeks amid heightened concerns over supplies from Russia and uncertainty around the timing of their arrival.[NG/GB]
 

The logo of the Nord Stream 2 gas pipeline project is seen on a large diameter pipe at Chelyabinsk Pipe Rolling Plant owned by ChelPipe Group in Chelyabinsk, Russia February 26, 2020. REUTERS/Maxim Shemetov

European prices jumped 9% on Tuesday with the Dutch front-month contract briefly trading at 89.00 euros/MWh.

"Any delays in the pipeline certification, all the more so on the eve of winter, is not in the interests of the European Union, that's without any doubt," Konstantin Kosachyov, deputy chairman of Russian parliament's upper house, told TASS news agency.

UKRAINIAN OPPOSITION

The head of the Ukrainian energy firm Naftogaz told Reuters he welcomed the German energy regulator's decision.

"Good," Yuriy Vitrenko said in a message. "This is an important point, which suggests that the German regulator shares our position that certification cannot only apply to the pipeline in Germany, but should apply to the entire pipeline from the territory of the Russian Federation to the territory of Germany."

Ukraine opposes the Russian-led project. Kyiv will lose revenues if gas from Russia bypasses it and it accuses Moscow of using energy as a weapon to threaten Europe's security.

Moscow has denied this and says Nord Stream 2 is a purely commercial venture that complies with European energy rules.

The spat over the pipeline has fed into broader tensions between Kyiv and Moscow. Ukraine has successfully applied to be part of the consultation process to certify the pipeline.

Moscow has already used a route under the Baltic Sea for Nord Stream 1 - the predecessor to Nord Stream 2 - which has a capacity of 55 billion cubic metres (bcm), equivalent to half Germany's annual gas usage.

Nord Stream 2 will double that and make Germany a central arrival hub for European gas volumes for onward distribution.

The German regulator said the Berlin economy ministry and the European Commission had been made aware of its notice to Nord Stream 2.

The Commission has two months after the German regulator's decision to assess the application for its part.

(Reporting by Vera Eckert, additional reporting by Vladimir Soldatkin, editing by Miranda Murray and Edmund Blair)

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