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German Energy Regulator Deals Fresh Blow To Nord Stream 2 Project

Workers at the construction site of the Nord Stream 2 gas pipeline near Kingisepp, in Russia's Leningrad region.
Workers at the construction site of the Nord Stream 2 gas pipeline near Kingisepp, in Russia's Leningrad region.

Germany’s energy regulator has declined to grant an exemption of rules governing the EU's internal gas market to the operators of the Nord Stream 2 pipeline to carry gas from Russia to Germany under the Baltic Sea.

The Federal Network Agency, Bundesnetzagentur, said on May 15 that the section of the pipeline that runs through German territory is not exempt from the EU gas directive under which production, transport, and distribution of energy should be independently organized.

The agency said a waiver could only have been granted to the Nord Stream 2 consortium if the pipeline had been completed by May 23 last year.

The consortium, which is led by Russia’s state-run Gazprom but also includes Western partners, said it disagreed with the decision, reiterating that while not physically complete the project had been economically functional. A spokesman said legal action was being considered.

The dispute won’t affect the construction of the 1,230-kilometer pipeline, which is already long behind schedule, but is related to its operation once it is running.

The $11 billion project has a capacity to export 55 billion cubic meters of natural gas a year. It is more than 90 percent complete with about 160 kilometers of pipeline remaining to be laid along the Baltic Sea floor near Denmark.

The U.S. Congress passed a bill in December 2019 that allowed Washington to impose sanctions on any vessel that helps Russia complete the pipeline, forcing Western-owned ships to stop work.

The United States opposes Nord Stream 2, saying it would strengthen Russia’s hold on Western Europe’s energy market and allow the Kremlin to avoid exports through Ukraine, depriving Kyiv of much-needed transit revenue.

Russia claims Washington is seeking to block the project with the goal of exporting more U.S. liquefied natural gas to Europe.

With reporting by Reuters

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