The start-up of the controversial Nord Stream 2 gas pipeline is in jeopardy. Germany has temporarily suspended the certification process for the infrastructure that aims to bring Russian gas directly to Germany via the Baltic Sea, bypassing Ukraine. Certification from the Federal Network Agency, the government body that regulates telecommunications, electricity, gas, postal services and railways, is essential for the installation to be operational. The decision marks a setback for the plans of the operating company, Nord Stream 2 AG, based in Switzerland and controlled by Gazprom, the Russian state gas company.
Nord Stream 2 is more than a gas pipeline. Its construction has been involved in controversy for years due to the increase in energy dependence on Russian gas that it represents for Europe, according to its critics. A central point in the controversy is Ukraine, and the fact that Russian gas stops flowing through its territory, which implies the loss of hundreds of millions of euros in rights of way and greater vulnerability with respect to Moscow. Many voices in the European Union accuse Russia of taking advantage of the continent’s energy crisis to try to speed up the approval of infrastructure.
“After examining the documents, the Federal Network Agency concluded that the certification of the operator of the Nord Stream 2 line is only possible if the operator is legally organized according to German law,” says the press release that the agency has made public this Tuesday. The characteristics of the gas pipeline operator conflict with European legislation, which is very strict in the defense of competition in the block’s energy market.
A German court decided last August that Nord Stream 2 must be subject to European Union energy regulations, according to which companies that produce and supply gas within the Union must be delinked from transport activities. The objective is to guarantee market competition, so that transmission system operators – where competition is not possible or not allowed – do not favor their own supply activities to the detriment of independent suppliers. This is a problem for the Nord Stream 2 operator, who has all three facets at the same time.
To circumvent this requirement, the company has decided to create a subsidiary that operates on German territory under German law. The certification process, says the regulator, “will remain suspended until the transfer of essential assets and resources to the subsidiary is completed.” The deadline for the agency to complete the exam ends in January, but then the project would go to the European Commission, which would have up to four months to make its own evaluation. After its green light, the Federal Network Agency would once again have two months to issue the final certification. Without it, the gas pipeline cannot operate, under the threat of high fines.
The construction of Nord Stream 2, which has the capacity to supply 55,000 million cubic meters of gas to Europe each year through 2,460 kilometers of pipelines, ended in September after many ups and downs from the sanctions that the United States government imposed on the Particiapant enterprises. The price of natural gas has risen again in Europe this Tuesday.
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